Ethiopia, Djibouti, South Sudan sign MoU on oil pipelines and infrastructural links

Ethiopia, Djibouti and South Sudan sign a Memorandum of Understanding on ‘to cooperate in developing infrastructural and road links as well as power and telecommunication connections’ on Feb. 2, 2012. The deal included ‘the possibility of building an oil pipeline’.

Here are two news reports on the matter.

A Week in the Horn of Africa, on its Feb. 10, 2012 issue, presented the MoU as follows :

Ethiopia, Djibouti and South Sudan sign a MoU on economic cooperation

Last week, Ethiopia, Djibouti, and the Republic of South Sudan signed a tripartite Memorandum of Understanding to boost economic cooperation and strengthen their coordination. One element of this was the installation of the Fiber Optic link from Djibouti to Addis Ababa on February 2nd. The aim of the MOU, signed by Finance Minister, Sufian Ahmed, by Djibouti’s Finance Minister, Elias Dawaleh Moussa, and by South Sudan’s Minister of Petroleum and Mines, Stephen Dhieu Dau, is to develop and expand a framework of cooperation and partnership among the three countries.

The major principles of the deal are aimed to boost mutual benefits and mutual understanding. It is also designed to provide encouragement to generate further signed general agreements on other issues to consolidate the existing relationship. The main purpose of this general framework is to strengthen the tripartite linkage between Djibouti, Ethiopia and South Sudan economically and socially. It is also intended to encourage the promotion of integration among IGAD member states.  

Ethiopia and the Republic of South Sudan have themselves also signed an MOU to foster their economic relations in the areas of trade and technical cooperation. They have further agreed to cooperate in developing infrastructural and road links as well as power and telecommunication connections, and cooperate technically in these areas. Similarly, Ethiopia and Djibouti have already to cooperate on two railway projects, one a line linking the port of Tadjourah in Djibouti with the capital of Tigrai Regional State, Mekelle, and secondly the line linking Addis Ababa via Dire Dawa to Dewele. 

In addition, the three countries further expressed their commitment to foster the already installed power and road connections between Ethiopia and Djibouti. They also agreed to enhance the development of infrastructure for the integration of the region at large to tap effectively into economic opportunities. This tripartite memorandum for the development of infrastructure in these three countries will now be considered as a model for regional integration among IGAD states. It will further boost existing economic and social relations in the region, and can be seen as a valuable expansion of the integration process and south-south economic cooperation within IGAD.


Reuters-Africa reported as follows:

S. Sudan mulls oil pipeline through Ethiopia, Djibouti

South Sudan is considering building an oil pipeline through Ethiopia and Djibouti, officials said on Thursday, weeks after the new country shut down crude production in a row over export transit fees with Sudan.

South Sudan seceded from Sudan last year, but the two countries have been unable to agree how much the Juba government should pay to transport its oil output of about 350,000 barrels per day through Sudan to a Red Sea port.

As talks floundered in December, Khartoum began taking a portion of southern oil to make up for what it calls unpaid fees. Juba responded by halting oil production last month and has started looking for alternative routes to export its crude.

At the moment, the only pipelines taking southern oil to market pass through Sudan. Analysts fear the dispute could spark conflict between the two countries, both of whose economies depend on oil.

South Sudan signed a memorandum of understanding with Ethiopia and Djibouti around trade last week which included the possibility of building an oil pipeline, Deputy Minister of Information and Broadcasting Atem Yaak Atem said.

"As a landlocked country, we would like to have an outlet to the sea for our goods to go to the outside world and for our imports to come in," he said.

South Sudan’s deputy finance minister Marial Awou Yol confirmed the country was considering the oil pipeline through Ethiopia.

"We do not want to put all our eggs in one basket," he said. "It should be financed by a consortium of companies. The more companies we have, the faster it can be done."

South Sudan signed a similar deal with Kenya in January.

South Sudan previously said an arm of the Toyota group had started a feasibility study into pipeline through Kenya, although some analysts say the pipeline is not economically viable unless significantly more crude reserves are discovered.

South Sudan declared independence in July under a 2005 peace deal that ended decades of civil war with the north. About 2 million people died in the conflict, fought over ideology, religion, ethnicity and oil.

Source: Reuters Africa


Check the Energy archive or the South Sudan archive for related posts.

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