South Sudan heralds independence with 1st oil cargo


South Sudan has sold its first oil this week, heralding its appearance on the market 10 days after gaining independence and despite having yet to reach a deal with the north on the split of oil revenues.

South Sudan seceded from the north on July 9, the culmination of a 2005 peace deal that ended decades of civil war. North Sudan lost 75 percent of its 500,000 barrel-a-day oil production after the south became independent, but oil is still flowing through its territory to reach buyers.

South Sudan Director General of Energy Arkangelo Okwang told Reuters on Tuesday the new country had sold its first oil cargo on Monday to Chinese buyer Chinaoil, a subsidiary of Petrochina, Reuters reports.
“The cargo left yesterday,” Okwang said, adding that it amounted to 1 million barrels, which is worth around $110 million under current prices, according to Reuters calculations.

The shipment was the a second major development for the South Sudanese energy industry since it gained independence.

Earlier this month, the country signed a deal with international trading house Glencore to help market its crude, effectively making the firm a rival to Chinese and Indian companies, which have so far dominated oil-producing ventures in South Sudan. {ID:nL6E7IE22I]

Sudanese oil flows mainly to Asia, with China buying more than a half of total volumes.

Some 2 million people died in Sudan in a decades-long conflict over religion, ethnicity, ideology and oil, and although the secession this month was remarkably peaceful, concerns remain over whether the north and south can agree on the vital sharing of oil revenues.

The north has threatened to cut shipments of oil from the south along its pipelines if the south refuses to pay transit fees or to continue sharing oil revenues

Complicating the deal with Glencore is also the fact that northern state-owned oil firm Sudapet has stakes in all producing projects in south Sudan, whereas South Sudan’s company Nilepet is not currently present in these projects.

Sudapet and Nilepet have yet to agree on how they are going to work together.