Ethiopia signed a memorandum of understanding with South Sudan to allow a crude oil pipeline to be constructed by the South Sudan Government to cross its territory.

The memorandum of understanding was signed on March 12, 2013, at the Hilton Hotel, with South Sudan and Djibouti, for the construction of the pipeline. Abrahame Tekeste (PhD), state minister for Finance & Economic Development; Elizabeth James Bol, deputy minister of Petroleum & Mining for South Sudan and Aboubaker Omar Hadi, chairman of Ports & Free Zones Authority of Djibouti,signed the document which allow South Sudan to export its crude oil through Djibouti port via Ethiopia.

A U.S. consultancy firm is hired to conduct the study on suitability of the Ethiopia’s roads, the cost of construction and the environmental impact of the pipeline. The study is scheduled to be completed within three months.

Ethiopia will be paid for each per barrel that crosses its territory. The amount that will be charged per barrel will be determined after the completion of the feasibility study for the construction of the pipeline, Wassihun Abate, head of the legal department of MoFED told Fortune.

The South Sudan government has similar arrangement with Kenya, since August 2012. The pipeline go up to Lamu Port, passing through Kenya’s Lapsset border Known as the Lamu Corridor.

Ethiopia will also benefit from delivery of oil to its doorstep and which save transportation costs, Wasihun told Fortune.

South Sudan will resume oil exports in the next two weeks, following its agreement with the Sudan on March 12, 2013, in Addis Abeba.

Source: Fortune