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South Sudan still has to pay US$1.3 billion to Sudan out of an original deal for US$3 billion worth of payments for using Sudan’s infrastructure to export its oil, South Sudan’s deputy finance minister Mou Ambrose Thiik told Reuters, just hours before he was dismissed from his post by the president.
According to now former deputy finance minister Thiik, the outstanding payment still due to Sudan is equal to eight years of oil export income for South Sudan at current oil prices. Although it was already known that South Sudan owed a debt to Sudan, the amount had not been disclosed up until now.
In 2012, South Sudan and Sudan reached an agreement that allowed South Sudan to resume its oil exports via Sudan. Exports had been cut off for months because the two countries—with South Sudan gaining independence from Sudan in 2011—had a dispute over fees and transit payments for South Sudan’s oil exports through Sudan. The agreement reached in 2012 was for South Sudan to pay US$3 billion to Sudan for using its northern neighbor’s oil exporting infrastructure.
Earlier this week, South Sudan Oil Minister Ezekiel Lol Gatkuoth said that rising oil prices were crucial for South Sudan to revitalize its battered economy, as oil revenues are almost all of the country’s hard currency export income.
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South Sudan is part of the non-OPEC group of producers currently in a joint agreement with OPEC to cut collective crude oil production through the end of 2018 in an effort to draw down global oil inventories to their five-year average and ‘stabilize’ oil prices.
South Sudan is studying the benefits of joining OPEC because it looks to double its oil production in 12 months from the current 135,000 bpd, Minister Gatkuoth told Reuters last week.
Earlier this year, Sudan and South Sudan agreed to open direct trade along the border and increase production in the oil fields in South Sudan that are currently not functioning, in a deal that will serve as an economic lifeline to both countries.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.