South Sudan, Kenya Sign Deal to Build Pipeline

By NICHOLAS BARIYO
LONDON—South Sudan signed an agreement to build an oil pipeline through Kenya, both sides confirmed Wednesday, a move that stands to heighten recent tensions over oil supplies between newly independent South Sudan and its northern neighbor, Sudan.

The pipeline will provide a much-needed alternative oil export route for landlocked South Sudan, which seceded from Sudan in July 2011 but has remained dependent on a pipeline infrastructure and pipelines located in Sudan. A pipeline through Kenya, the shortest path from South Sudan to a seaport on the East African coast, would deprive Sudan of its chief source of crude.
On Monday, South Sudan began closing down its shipments of oil to its northern neighbor, accusing it of stealing crude oil worth $815 million since December. South Sudan's President Salva Kiir said Sudan had also built a spur pipeline to divert 120,000 barrels a day of South Sudanese oil to refineries in its capital, Khartoum.
A Sudan spokesman couldn't be reached for immediate comment.
Martin Heya, the commissioner in charge of petroleum at Kenya's Energy Ministry, said Wednesday that a Kenya-South Sudan pipeline deal had been signed the day before.
"My permanent secretary and the energy minister signed the agreement in Juba yesterday," Mr. Heya said in an interview. "The pipeline will run up to Mombasa and it will be constructed and managed by South Sudan government."
Mr. Heya said he has yet to get details on the cost or capacity of the project.
Separately, the South Sudan presidency said the new pipeline would be completed in less than a year, allowing the resumption of oil exports upon which the country relies for over 90% of its revenues.
In a statement, the South Sudan government said that at least 90% of its pipelines have so far been closed down. The South Sudan parliament started debating government's decision to halt oil shipments Wednesday and is expected formally endorse the halt in the next few days.
China National Petroleum Corp., India's Oil and Natural Gas Corp. and Malaysia's Petroliam Nasional Bhd., or Petronas, account for around 90% of the combined oil production in the two countries.
South Sudan became an independent country last summer after decades of civil war. It accounts for around 75% of the two countries' joint oil output of around 500,000 barrels a day.

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