Bloomberg News

South Sudan Says It’s Ready to Negotiate Deal on Oil at Talks

May 10, 2012

South Sudan is ready to negotiate an agreement on an oil dispute with Sudan that prompted the newly independent nation to shut down its crude production, Cabinet Affairs Minister Deng Alor said.

The African Union sent officials to Juba, the southern capital, and Khartoum to prepare for a resumption of negotiations in the Ethiopian capital, Addis Ababa, Alor told reporters today. Talks broke off last month as forces from the two countries clashed along their disputed border. The United Nations Security Council, backing an African Union peace plan, warned the two countries that they faced sanctions unless they stopped fighting and returned to talks by May 16.

South Sudan halted its 350,000 barrel-a-day oil production in January after accusing Sudan of stealing $815 million worth of its crude. Sudan said it confiscated the oil to cover unpaid fees for the use of its export pipeline.

“Definitely we will discuss the oil, and if there is an agreement on the use of the pipeline again through the territory of Sudan we will do that,” Alor said. South Sudan will continue to pursue plans to build alternative pipelines, he said.

South Sudan’s chief negotiator, Pagan Amum, said in an April 23 interview that his government would no longer export its oil through Sudan. Alor said that was a reaction to a statement by Sudan president Umar al-Bashir that he wouldn’t allow South Sudan to use pipelines running across his country.

South Sudanese Oil

The shutdown in the south alone cost China 260,000 barrels a day, New York-based Eurasia Group said in February. The main producers in Sudan and South Sudan are China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s ONGC Videsh Ltd.

Since South Sudan gained independence in July, talks have failed to yield agreements on outstanding post-secession issue, including disputed border areas and the pipeline fees.

Tensions between the countries exploded last month when South Sudan occupied the contested, oil-rich area of Heglig. It pulled troops out 10 days later, saying it was complying with a UN Security Council request.

To contact the reporter on this story: Jared Ferrie in Juba, South Sudan at jferrie1@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net


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