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Trafigura in South Sudan oil row

The controversial oil trader confirms that a tanker it bought is the subject of a growing diplomatic incident

Trafigura has been accused of buying oil “looted” from South Sudan by neighbouring Sudan with which it has signed a peace treaty following decades of civil war that claimed more than 1.5m lives.

The controversial oil trader, which came to global political attention when it was revealed that a ship it had chartered dumped tonnes of toxic oil slops in Ivory Coast, confirmed that a tanker of oil it bought is subject to the growing diplomatic incident.

“In total, the revenue that the government of Sudan has looted since December amounts to approximately 5m (£518m),” the President of South Sudan, Salva Kiir, said in reference to Sudan allegedly selling on tankers of South Sudan’s oil.

Omar al-Bashir, Sudan’s president, warned the dispute could spark another war. “We will go to war if we are forced to go to war,” he said on national television.

Trafigura, which is run from Switzerland by billionaire Claude Dauphin, confirmed that the oil it bought from Sudan is subject to a legal claim from South Sudan, the world’s youngest country, created after it broke away from Sudan last year.

“The government of South Sudan was asked to provide further information to support its claim to ownership of the oil in which Trafigura has an interest. Some information has been provided which we are reviewing,” Trafigura said in a statement.

Trafigura said it had made “significant efforts” to confirm ownership of the oil it bought three weeks ago. “In relation to our interests in recent shipments, given the ongoing political discussions with respect to Sudanese oil ownership, significant efforts have been made to confirm legal title, and that confirmation has been provided.”

South Sudan, which is landlocked and exports its oil via a pipeline through Sudan, stopped all oil production last week as the dispute escalated.

Last month Sudan admitted to holding tankers carrying South Sudan’s oil, claiming that the south had failed to pay a multimillion-dollar transit fee for the use of the north’s pipeline to Port Sudan on the Red Sea.

Trafigura bought the oil in an Indian-flagged tanker called Ratna Shradha three weeks ago. The ship, which is believed to be heading for port in Malaysia, was last seen on 5 February near Singapore, according to Reuters. South Sudan has warned that it may take legal action against any parties that buy the disputed cargo. Oil accounts for 98% of South Sudan’s annual income.

This is not the first time Trafigura has been involved in legally suspect oil deals. In 2001 the trader was allegedly involved in smuggling 500,000 barrels out of Saddam Hussein’s Iraq. Trafigura insists it handled the deal via third parties in good faith.

Trafigura said its profits in its last financial year were boosted to more than .1bn following “prolonged volatility” created by the Arab spring uprisings and the Japanese tsunami, according to a letter Dauphin sent to bondholders seen by the Financial Times.

“Social upheaval in Libya and Egypt led to a restriction in North African crude supply. In Japan, the catastrophic earthquake and resulting tsunami had a profound effect on global industrial production, the most important determinant of commodities markets,” the letter said. © 2012 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds