South Sudan’s Finance Minister Kosti Manibe has recently stated that a proposed pipeline allowing the country to export its oil via the Kenyan port of Lamu, as opposed to relying on a route through hostile neighbour Sudan, will cost US$ 3 billion (£1.91 billion).
Manibe acknowledged that while South Sudan did not have the money to pay for the pipeline's entire cost, Africa’s youngest country would be investing in the project and had the necessary reserves of crude to offer guarantee to any financiers.
"The 2000 km pipeline will cost approximately US$ 3 billion dollars," he told the media recently in Nairobi. "We don't need to have the money right now, we have the reserves," he said. "South Sudan will definitely have equity in the pipeline," he added.
South Sudan’s Energy Minister Stephen Dhieu Dau has previously confirmed 7 billion in proven reserves in the country.
Officials estimate construction on the pipeline will take two years, and will begin by June 2013. The pipeline will have a capacity of between 700 000 - 1 million bpd of Southern Sudanese crude.
Last year, South Sudan seceded from Sudan and the two neighbours countries have violently disagreed over how much the Juba government should pay to transport its oil output through Sudan. Oil is essential to both economies and made up 98% of South Sudan's budget.
The two Sudans recently reached an interim deal, ending a long-term row that led to the shutdown in January of southern oil production of 350 000 bpd.
Prior to the shutdown at the beginning of the year, China was the biggest buyer of South Sudanese oil, and Chinese state firms are the biggest oil operators in the country.
An agreement over the South Sudan-Kenya pipeline was initially signed in January. Kenya's Energy Minister, Kiraitu Murungi, confirmed that the pipeline could also transport crude from Kenya's Turkana area, where British explorer Tullow Oil found oil deposits earlier this year, should they be prove to be commercially viable.
"We believe from the indications that we've been given that we if we are lucky we might have as much oil as (South) Sudan. Any extra that we don't use in the country we are going to put in the same pipeline as the Sudanese oil and export it through the port of Lamu," said Murungi.
Murungi also confirmed the country is planning to build a second refinery in the northeastern town of Isiolo to produce up to 100 000 bpd and refine crude from Turkana.
Kenya already has another refinery near the port of Mombasa, processing 1.6 million tpy of crude.
Edited from various sources by Cecilia Rehn.