Oily Alliance

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An oil pipeline stretching from Juba to Djibouti via Ethiopia is a step closer to reality after regional allies Djibouti, South Sudan and Ethiopia agreed to move to the next step of a tripartite infrastructure deal.  The oil pipeline project will cost USD three billion and will start at the beginning of 2013.

The three countries have already signed a Memorandum of Understanding (MoU) on February 2, 2012 to build a pipeline, railway and fibre optic cable from Djibouti to Juba via Ethiopia.
Since then the Tripartite Committee began a feasibility study about the construction project, which gave priority to building an oil pipeline that can be used to export South Sudan’s petroleum. The signing is an important tripartite agreement for the construction and operation of an oil pipeline from the fields of Southern Sudan to Djibouti through Ethiopia.
According to our sources, the Ethiopian Minister of Finance and Economic Development (MoFED) Sufian Ahmed, Djiboutian Minister of Economy and Finance Ilyas Moussa Dawaleh and South Sudan petroleum and Mines Minister Stephen Dhieu Dau met in Addis Ababa on Friday, September 28 at the MoFED office and signed an agreement for the next stage of the pipeline project.
Haji Ibssa, public relations head of MoFED, told Capital that the three Ministers have met in the past week. He said that they did not sign any new deal but our sources confirmed that the three countries have agreed to realize the construction of the pipeline in the second quarter of the coming year.
The Djiboutian Minister of Economy and Finance, Ilyas Moussa Dawaleh, who spoke at the signing ceremony, immediately hailed the historical dimension of this new tripartite agreement as one-step further forward.
Dawaleh said he was confident of a win-win partnership coming from the implementation of this major project and was keen to emphasize the commitment of the three Nations’ leaders to lay the groundwork for successful regional economic cooperation.
In his speech, the Minister of Economy and Finance reaffirmed the strong commitment of the Government of Djibouti to spare no effort to complete the oil pipeline project in a timely manner.
The officials said that the joint committee finalized the initial study for the implementation of the pipeline project.
In the next few months a detailed feasibility study will be completed.  Construction will begin after six months, and should cost around USD three billion although the exact amount will not be known until the study is completed.
Several international firms have expressed an interest in financing the endeavour including companies from the USA and Japan but sources said negotiations are still in the early stages.
According to our sources, China will also be part of the finance source. According to experts, who have intimate knowledge about the pipeline project, the South Sudan’s oil export via Ethiopia is economically feasible than using Port Sudan, because the Port of Djibouti via Ethiopia is more closer.
According to the initial study, the pipeline construction project will be finalized within 36 months.   
The regional allies, Ethiopia, the oil-rich South Sudan (both are landlocked countries) and Djibouti have also planned to connect by railway to boost trade relations. Currently, the railway project that connects Ethiopia with the Port of Djibouti and the under construction railway project to the Tadjoura Port will help boost the nations’ trade relation.
The other project that the three countries agreed to implement is the laying out of fiber optics cable (an international telecom line) from Djibouti via Ethiopia to South Sudan.