South Sudan Threatens To Expel Chinese Oil Companies

Chinese oil companies operating in South Sudan face the possibility of expulsion if it is proven that they are complicit in stealing the country's oil, a senior official said here today.

The newborn state which became independent last July is locked in a row with its northern neighbour over oil and transporting it through the pipeline that runs through Sudan's territory.

Khartoum wants Juba to pay $36 per barrel of oil it exports using Sudan's infrastructure. But South Sudan says the fair fee should be around $1. An African Union (AU) panel tasked with mediating in this dispute among others has tabled a number of proposals that were rejected.

The Sudanese government frustrated with the lack of progress of the oil talks started seizing part of the crude exported saying that this would be to make up for unpaid invoices owed by Juba. The latter retaliated by suspending oil production altogether.

South Sudan also warned that it will sue any party that is proven to have facilitated or bought oil “stolen” by Khartoum.

Today the country's chief negotiator in the oil talks Pagan Amum went further in this regard and singled out Chinese companies.

"Our relations with China are beginning but they are of course having difficulties now because of the role of some Chinese companies or individuals covering up some of this stealing," Amum told reporters in Juba according to Reuters.

"We will make them pay the cost or else they are out of the country," he added, without naming the firms.

State oil firms from China, India and Malaysia own majority shares in the three consortium's extracting oil in South Sudan. China is the biggest buyer of South Sudanese oil and has built the most oil facilities in both countries.

Amum also said the Sudanese oil ministry had ordered Malaysian-Chinese pipeline operator Petrodar this week to switch on a tie-in pipeline to divert 120,000 bpd of southern oil to Sudan's refineries.

He handed out a letter dated 13 February, allegedly from Petrodar, informing South Sudan that Sudan had commissioned the tie-in line to transfer crude "unilaterally and by force".

China has attempted to reconcile differences between the two sides and last year dispatched its special envoy to Africa for that purpose but has met little success.

Despite being the country with the largest stake in the oil, Beijing has remained mostly silent in recent weeks amid escalation of rhetoric between Khartoum and Juba and warnings from the two sides on the possibility of reverting back to war.