February 3, 2016 / 1:35 PM / 3 years ago

South Sudan, Sudan agree to peg crude pipeline fees to oil price

JUBA, Feb 3 (Reuters) - Transit fees that Sudan charges its neighbour South Sudan will be based on prevailing crude oil prices, a move away from a fixed fee, South Sudan’s petroleum minister said on Wednesday.

In recent weeks, local media have reported of a growing standoff between Sudan and South Sudan over oil transit fees, with the south wanting a cut as the collapse in global oil prices mean transit costs sometimes exceeded the price of crude.

Sudan previously charged South Sudan about $24.50 a barrel in transit fees. Benchmark Brent crude was trading around $33.30 per barrel on Wednesday.

The official Sudan News Agency reported in late January that Sudan had offered a fee cut, but gave no details.

The two countries’ petroleum ministers met in South Sudan’s capital Juba on Wednesday.

“When we negotiate on ... fees in particular, that thing would not be fixed ... It will fluctuate up and down depending on the prices of the crude globally,” South Sudan Petroleum Minister Stephen Dhieu Dau told reporters after meeting with his Sudanese counterpart, Mohammed Zayed Awad.

Dau said the new fee would be agreed upon by a technical team in not less than one month.

“We have agreed in principle but we need the technical people to work on it and in a week to come we will reach the conclusion,” Awad said, declining to give figures.

Sudan lost most of its oil earnings when the south seceded in 2011 and is acutely short of revenue. South Sudan’s crude production stands at about 165,000 barrels per day. (Writing by George Obulutsa; editing by Susan Thomas)

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