South Sudan forms oil marketing venture with Glencore

By Eric Watkins
South Sudan’s state-owned Nilepet has formed a joint venture firm with Glencore International Plc that will begin marketing oil produced by the newly founded country.

“This joint venture will help the Republic of South Sudan develop its national oil company through skills transfer and training, and be responsible for marketing the crude oil from July 9 onwards,” said Information Minister Barnaba Marial Benjamin.

The new firm, called PetroNile, will market South Sudan’s output of about 375,000 b/d of oil, which is produced mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp.

Under the 2005 peace agreement brokered between the two states, revenues from the South’s production were formerly shared equally with the North. But that agreement expired on July 9 with the founding of the new nation, and a new one has yet to be established.

Currently, the South’s oil is exported via two pipelines leading through northern Sudan to an export facility on the Red Sea. But Juba is considering plans to build a new export pipeline in an effort to free itself of any further control by the North.

South Sudan’s Oil Minister Luol Deng said recently that his country is in talks about a pipeline to Ethiopia, which receives about 80% of its oil from the Sudan – a tidy figure for the new nation. But Ethiopia is land-locked and cannot provide South Sudan with an outlet to world markets.

Kenya represents another possibility. South Sudan’s Roads and Transport Minister Anthony Makana recently announced plans for a 200 km pipeline from Juba to Kisumu in Kenya.

Last year, Toyota Tsusho, the trading arm of the Japanese carmaker, said it was developing plans to build a $1.5 billion pipeline to run from Juba to the Kenyan island of Lamu.

That possibility remains on the table according to South Sudan’s Director of Energy Arkangelo Okwang, who recently confirmed that his country has been in contact “from time to time” with Toyota Kenya.

Not least, the South Sudanese also are looking into the possibility of a pipeline to the south that would join with a pipeline under consideration in Uganda that would carry oil to Kenya’s Indian Ocean Port of Mombasa.

International oil companies have long championed the idea of such a pipeline from Uganda, but a plan for its development has yet to be agreed as Ugandan officials prefer to refine their oil and market it as products.

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