Sudan edged back from a day-old order to block all oil exports from South Sudan on Sunday, saying it could reverse its decision if its neighbour stopped backing rebels, and bringing the countries back from the brink of confrontation.
The standoff, even if it is eventually resolved, is a stark reminder of the unpredictability of this small but, for China and other Asian buyers and producers, still significant corner of the crude industry. Sudanese President Omar Hassan al-Bashir on Saturday accused South Sudan of arming insurgents in his territory and ordered the closure of pipelines carrying oil from the landlocked South through his country to Port Sudan on the Red Sea - currently the South’s only export route. A day later, Sudan’s information minister told reporters Khartoum might not go through with the order and gave the South time to respond.
“We plan to close the oil pipelines within 60 days,” Ahmed Belal Osman said. “But if South Sudan is serious ... and stops backing rebels, if we get international guarantees for that, then our door is open and we can reverse the stoppage.”
An industry source said cross-border crude flows were continuing normally as the oil operators had not been told by either government to halt any cargoes or turn off wells. A stoppage would cut off the crude and transit fees that make up both countries’ main source of foreign income. Bashir’s order raised fears of new tensions between old foes who came close to a full-blown war when skirmishes broke out along their disputed border in April 2012. It was also a setback for the African Union, effectively tearing up an agreement it had brokered in March to resolve a dispute between the countries over transit fees that had shut the pipelines for 16 months. —Reuters
