(Recasts with South Sudan government comment)
By Hereward Holland and Lucy Hornby
JUBA/BEIJING Jan 21 South Sudan will announce
plans for an oil export pipeline through East Africa next week,
a priority for the new nation because its crude is "no longer
safe" in Sudan, a government spokesman said on Saturday.
Landlocked South Sudan took about three quarters of Sudan's
roughly 500,000 barrels per day of oil production when it
seceded from Sudan in July under a 2005 peace deal, but it still
relies on Sudan's infrastructure to export crude.
Oil is vital to both economies -- it accounts for almost all
of South Sudan's government revenues -- but the two countries
have yet to agree how much South Sudan should pay as a transit
South Sudan threatened to halt crude output within two weeks
on Friday, after its northern neighbour started seizing crude to
compensate for what Khartoum calls unpaid fees.
"The pipeline is now a priority. The minister of petroleum
and mining will announce next week which pipeline we are going
with and the consortium that will be involved," Barnaba Marial
Benjamin, South Sudan's information minister and government
spokesman, told Reuters by telephone.
"It has to be done because of the shutdown. Our crude is no
longer safe in Sudan," he said. "If we choose the pipeline
through Kenya it could take less than 10 months to complete."
South Sudan has floated the idea of an East African pipeline
before, but outside experts say barriers include geography and
the need to ensure enough production volume to fill the pipeline
in the future.
South Sudanese officials have previously said the country
can survive on credit using crude as collateral if exports were
"CALM AND RESTRAINT"
The new pipeline will be built with the help of
international oil companies operating in its fields, China's
state-run Xinhua news agency reported earlier on Saturday.
China, a major buyer of South Sudanese crude, has urged
"calm and restraint" over the dispute, which began in November.
The two neighbours together rank as the seventh-largest
supplier of crude oil to China, accounting for 5 percent of its
imports in 2011.
South Sudan has started "practical steps" to construct a
pipeline through Kenya and Uganda and would begin construction
of a refinery in South Sudan immediately, Xinhua quoted Benjamin
International oil firms currently operating in South Sudan
would construct the pipeline and refinery, the agency cited
Benjamin as saying. It did not specify which.
Oil firms active in South Sudan include Chinese state-owned
China National Oil Corp., or CNPC, and Sinopec, Malaysia's
state-owned Petronas, and Oil and Natural Gas Corp of
India, or ONGC.
French oil major Total said in December it could
build a pipeline from South Sudan to Uganda that would continue
to Kenya's coast but that construction of the pipeline at the
time was still "just thoughts".
South Sudanese officials have also talked to Toyota Kenya
about the possibility of linking to a proposed regional
oil corridor to help export crude.
(Additional writing by Alexander Dziadosz; Editing by Alison