9th April 2020
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South Sudan renegotiating oil ‘compensation’ package with Sudan

Authors: Charles Wote | Joakino Francis | Published: Wednesday, October 9, 2019

South Sudan's Petroleum Minister, Daniel Awow speaks to the press in Juba on October 7, 2019. Photo/Credit/ Charles Wote/Eye Radio

The Minister of Petroleum says South Sudan is renegotiating the 2012 oil compensation deal with Sudan before the December 2019 deadline.

In 2012, the government signed the Transitional Financial Arrangement, TFA, an agreement in which Juba would pay Khartoum an amount equivalent to $3 billion -from its oil revenue, following the independence of South Sudan.

Before 2011, Sudan managed 70% of the oil fields within the then autonomous region.

The agreement says South Sudan would provide financial support to Khartoum over three and a half years.

The timeline was extended in 2015 due to the delay caused by the 2013 violence.

According to the Minister of Petroleum, so far South Sudan has paid $2.4 billion.

“TFA  was connected to oil production; when you produce one barrel you have to pay $15, and if two barrels [it] is $30,” Daniel Awow told the press in Juba.

He said the remaining $600 million was supposed to be paid before December 2019, adding that renegotiating the deal with Sudan will give South Sudan more time to complete the payment.

“The whole burden of paying the TFA was…confined to block 3 and 7, and that is why we could not finish… but if the production was in block 1,2,3,7 and block 5A, we would have finished it earlier,” he said.

“This has to be addressed together with Sudan and we have made some progress in our last meeting with Sudan.”

Before the 2013 conflict, South Sudan’s oil production was at 350,000 barrels a day.

It is currently increasing production from 135,000 to 178,000 barrels a day by opening up more oil wells.

“We are now moving very fast to see to it that before the end of the year…we are going to produce not less than 15,000 barrels a day which is going to be an additional volume to our production.”

Meanwhile, a member of the Council of States called on the government to also review contracts signed with oil companies before the independence of South Sudan.

Honorable Mary Ayen Majok said the oil companies have been violating the Petroleum Management Act by “degrading the environment.”

According to reports, people living near oil fields have been affected by oil pollution.

Civil Society groups, legislators and local communities have highlighted serious environmental pollution mainly in Northern Liech and Northern Upper Nile states.

Oil pollution exposé by Eye Radio’s geo-Journalist Joakino Francis in Toma-South and Unity oil fields (Block 4) in August and October 2018 found that crude oil has been left in ponds since 2013.

Residents said that there has been an increase in the number of women who have stillbirths and deformed children. Other effects that they voiced were skin rashes, eye disease, and sudden death.

They said they are only compensated with oil containers that had been used during the oil production, for fetching water.

“The government of South Sudan needs to take a radical decision, and this review [should] lead to reforms that we have been talking about,” Hon. Ayen told Eye Radio.

The South Sudan constitution states that “any expropriation of land for the purposes of petroleum activities should be in the public interest and in consideration for prompt full and just compensation monetarily or otherwise.”

Oilfields in South Sudan are being operated by private oil and gas companies with concessions from shareholders of four countries -namely; Malaysia, India, China and South Sudan through the Nile Petroleum company.

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