/ 4 January 2012

Shell sizes up South Sudan for oil opportunities

Royal Dutch Shell said it is eyeing potential opportunities in South Sudan, which last July broke away from Khartoum, taking with it two-thirds of Sudan’s 500 000 barrels per day of oil production.

“We continuously review potential business opportunities around the world. We would like to better understand the current security, political and business environment in South Sudan, and how this has been impacted by the secession,” a spokesperson said.

The normally tightlipped oil major does not usually comment about possible new areas of interest.

The landlocked South Sudan’s oil industry faces uncertainty due to a dispute with Khartoum about the use of an oil pipeline to the Red Sea — the only current means of exporting South Sudanese crude.

South Sudan accused Khartoum in November of temporarily blocking the loading of crude. Sudan denies the charges.

Khartoum has demanded a tariff fee for transporting the oil that is in excess of 10 times international norms, which are usually calculated on a per kilometer or per mile basis.

French oil major Total SA said last month it had proposed building a pipeline to export the oil via Uganda, which has discovered large reserves around Lake Albert.

Ethiopian newspaper The Reporter said last week that Shell was planning to construct an oil pipeline line from South Sudan to Ethiopia.

The newspaper said “reliable sources” had told it that a business delegation from Shell had visited South Sudan in November.

Shell declined to confirm the visit or the reported pipeline plan.

Analysts doubt a pipeline via Ethiopia would be commercial at this point because Ethiopia lacks developed oil infrastructure or a coastline which would allow it direct access to international markets. — Reuters