(Juba) – Sudan and South Sudan remain at odds over a proposed revision to oil transit fees, as talks between the two nations ended without agreement, according to sources quoted by Radio Tamazuj. The fees in question relate to payments South Sudan makes to Sudan to export its oil via Sudanese territory to the Red Sea.
South Sudan, which became independent from Sudan in 2011, inherited a large portion of the region’s oil reserves, around 350,000 barrels per day at the time. However, the country is landlocked and depends entirely on a pipeline that runs north through Sudan to Port Sudan for exporting its crude oil.
In recent talks, Sudan proposed changes to the existing fee structure. The adjustments are linked to ongoing logistical issues at the Bashayer oil terminal, which is the key hub for receiving, storing, and loading South Sudanese crude for export. No final deal was reached during the discussions.
The negotiations come shortly after oil exports from South Sudan via Sudan resumed earlier this year, following a near year-long suspension caused by conflict in Sudan. In March 2024, Sudan declared a force majeure—effectively halting all oil transit—after a pipeline was damaged in a conflict zone. Oil flows only resumed in early 2025 following new security arrangements and relative stability along key transit corridors.
Despite the resumption of exports, the lack of an updated agreement on fees introduces uncertainty for both countries. For South Sudan, oil accounts for the majority of government revenue and foreign exchange, making the uninterrupted flow of crude a national priority. The fees paid to Sudan are a significant cost burden, but the absence of alternative routes limits South Sudan’s bargaining power.
In light of this dependency, South Sudan has been exploring alternative export options. In September 2024, the government announced discussions with China National Petroleum Corporation (CNPC) regarding the potential construction of a new oil pipeline linking South Sudan to the port of Djibouti via Ethiopia. This proposal was raised during President Salva Kiir’s visit to Beijing, where talks focused on long-term energy cooperation, including the development of a domestic refinery and distribution networks.
The possible Djibouti route would give South Sudan a direct link to global markets and reduce reliance on Sudanese infrastructure. However, such a project would involve high costs, complex cross-border negotiations, and several years to complete.
In the meantime, the two Sudans remain interdependent, with oil transit fees serving as a source of hard currency for Sudan and as an export lifeline for South Sudan. Until a new agreement is reached, oil shipments will continue under the terms of the existing arrangement, but tensions over pricing and logistics are likely to persist.
Any prolonged disruption could affect national budgets, investor confidence, and the flow of international aid tied to economic performance.
