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The possibility that South Sudan might shut down its oil production looks likely to be averted after Juba and Khartoum entered talks to re-negotiate the price that Sudan charges the south to use its infrastructure for oil exports. In the early weeks of the year, South Sudan’s crude production dropped significantly as the continued downturn in global prices meant that it faced selling oil at a loss.
Since an agreement signed in Addis Ababa in September 2012, South Sudan has been subject to two separate charges for the use of pipelines connecting the landlocked country to oil export facilities at Port Sudan. It pays a transit fee, set at $11/B for Nile Blend crude from Unity state and $9.1/B for Dar Blend from Upper Nile state, in addition to a compensation payment for Sudan’s loss of oil resources and infrastructure since the separation of the two nations. The latter, known as the Transitional Financial Arrangement (TFA), consists of a $15 payment for every barrel of crude exported, with the aim of paying off a total of $3.028bn over a period of three and a half years.
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