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      • South Sudan orders head of pipeline company to leave country

South Sudan orders head of pipeline company to leave country

South Sudan's government ordered Petrodar Operating Co. President Liu Yingcai to leave the country amid a dispute over relocating the company's headquarters, Deputy Oil Minister Elizabeth James Bol said.

"He was asked to leave in a Feb. 20 ministerial order," Bol said in a phone interview today from Juba, the capital. "He was resisting the policy of relocating the Petrodar headquarters fully to South Sudan" from Khartoum, the capital of neighboring Sudan, she said.

Petrodar, whose biggest shareholders are China's state-owned China National Petroleum Co. and Kuala Lumpur-based Petroliam Nasional Bhd., operates a pipeline that ferries oil from South Sudan via Sudan to an export terminal at Port Sudan on the Red Sea. China Petroleum & Chemical Corp., China's largest oil refiner, owns a 6 percent stake. No one answered the phone when Bloomberg called Petrodar's offices seeking comment.

South Sudanese Oil Minister Stephen Dhieu Dau said last month his government would investigate whether Petrodar had under-reported oil production by 40,000 barrels per day and said some crude was diverted to Sudan’s refinery by a "tie-in" pipeline. Petrodar said last month it reported volumes "accurately and transparently." Last week, Petrodar also said it protested Sudan's forced lifting of South Sudanese oil onto three ships without South Sudan's authority as well as the "tie-in" pipeline.

Sudan's government says it seized the oil to cover unpaid bills.

`Many Reasons'

Bol said there were "many reasons" for Liu's expulsion, including his "noncompliance" with a decree by South Sudanese President Salva Kiir that the company transfer the stake held by Sudapet Co., Sudan's state oil company, in Petrodar to South Sudan's Nile Petroleum Corp.

The decree has been a point of contention between the two countries during negotiations aimed at settling outstanding issues, including oil revenue sharing, since the south declared independence in July.

South Sudan gained control of about 75 percent of the formerly united country’s 490,000 barrels a day of output at independence. Negotiations since then have failed to yield an agreement on how much the south should pay for the use of Sudan’s export pipeline, leading South Sudan to shut down its oil production last month.

The two countries are scheduled to meet March 6 in the Ethiopian capital, Addis Ababa, for the next round of talks. Liu's expulsion may be a pre-negotiation tactic, said Marc Mercer, a London-based Africa associate with Eurasia Group.

Risk

"This action is part of Juba's strategy to push its message to Khartoum that it won't stand down easily and to further leverage the shutdown in order to get what it wants at the negotiating table," he said in an e-mailed response to questions today. The strategy my backfire, Mercer said.

"Juba runs the risk of losing credibility at the negotiating table though through noise around actions like these," he said.

China will probably be most affected by the South Sudan’s oil shutdown, the International Energy Agency said in its monthly oil market report on Feb. 10. China imported about 260,000 barrels a day from the Sudan and South Sudan last year. South Sudan produced about 260,000 barrels a day in December, while Sudan pumped 110,000 barrels, according to the agency.

On Feb. 16, Pagan Amum, South Sudan's chief negotiator at the talks with Sudan, accused unidentified oil companies of helping Khartoum seize southern oil. The relationship between China and South Sudan is experiencing "difficulties now because of the role of some Chinese companies or individuals covering up some of this stealing," he told reporters in Juba.

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