The South has announced the suspension of oil exports through Sudan.
South Sudan has shut down more than 900 oil wells, a South Sudan official said after accusing neighbouring Sudan of stealing its oil. The secretary general of South Sudan's ruling party, Pagan Amum said
Wednesday that the shutdown will have a big impact on the new nation, which relies heavily on oil revenues, but "he would rather see the country's oil sit in the ground than lose it to Sudan".
All of South Sudan's oil currently runs through Sudan's pipelines to Port Sudan for export. Khartoum has asked for $32 per barrel of oil shipped through the pipes - an offer that South Sudan dubbed as "extortion". South Sudan in turn offered $1 per barrel.
The landlocked country on Sunday started to halt oil production after accusing Sudan of stealing $815 million worth of the south's oil. South Sudan broke away from Sudan last July to form the world's newest country. But the two new neighbours never agreed on the transit fees that South Sudan should pay Khartoum.
The news came one day after South Sudan and Kenya signed a memorandum of understanding to build a pipeline from South Sudan's oil fields south to Lamu, on the northern Kenyan coast, where a new port is planned.
The project has been a matter of speculation for the last few years, but South Sudan's Oil Minister Stephen Dhieu Dau said planning for the project will now begin as soon as possible.
"We do not know exactly when, but the pipeline is a priority for the government," he said.
According to Amum the oil shutdown will be completed within two to three days. He said South Sudan was also approaching Ethiopia about developing a new pipeline that would eventually go to port through Djibouti.
While South Sudan is poised to lose massive amounts of money by shutting down its oil industry, Sudan bears to lose out as well, and risks losing future revenue if South Sudan completes new pipelines out if its territory.