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[Dehai-WN] (Reuters): INTERVIEW-Oil shutdown pushing S. Sudan to end row -Sudan

From: Berhane Habtemariam <Berhane.Habtemariam_at_gmx.de_at_dehai.org>
Date: Sun, 25 Mar 2012 23:34:54 +0200

INTERVIEW-Oil shutdown pushing S. Sudan to end row -Sudan

Sun Mar 25, 2012 2:39pm GMT

* Deal depends on ending aid to rebels-northern negotiator

* Says south has become more conciliatory since shutdown

* Presidents to discuss security, oil on April 3

By Alexander Dziadosz and Khalid Abdelaziz

KHARTOUM, March 25 (Reuters) - South Sudan's shutdown of its crude
production in a damaging row with Sudan over oil payments appears to have
backfired and put pressure on Juba to soften its bargaining stance, on e of
Khartoum's negotiators said on Sunday.

Any deal still hinges on whether the two countries can address alleged
support for rebels on both sides of the border, but southern officials have
a growing incentive to tackle the obstacle, Sabir Hassan told Reuters in an

"In the past, the pressure was all on the north," he said. "Now both sides
are under pressure, so both will be willing to find a way out."

South Sudan's chief negotiator Pagan Amum said on Saturday his country hoped
to end the row within "a month or two", a time frame Hassan said could be
realistic if southern officials were serious about reaching a settlement.

South Sudan split from Sudan in July under a 2005 peace deal that ended
decades of civil war, but the two have yet to resolve a range of
partition-related issues.

Although the south took about three quarters of Sudan's oil output, it still
needs to use pipelines, a Red Sea terminal and other facilities in Sudan to
export crude. The two nations have wrangled over how much it should pay to
do this.

In January, South Sudan halted its production of about 350,000 barrels per
day in protest after Khartoum started taking some oil as "dues in kind" to
make up for what it said were fees Juba had failed to pay since

Hassan said the shutdown had put the squeeze on South Sudan to make a deal
because oil provides 98 percent of state revenue, in turn vital to an
economy based mostly on government salaries.

"When they shut down the wells, they stopped the source of their revenues.
So they came under pressure," he said, adding that southern negotiators had
later become more conciliatory.

Sudan has also suffered from the disruption. Oil contributed about three
quarters of Sudan's foreign exchange and half of state revenue before the
south seceded, said Hassan, a former central bank governor who co-chairs
Khartoum's economic negotiations team.


At least in public, the two sides are still far apart.

Among other ideas, Khartoum has proposed that South Sudan pay a mix of fees
amounting to about $36 per barrel, of which about $6 would be transit fees.
The rest would cover transport and the use of a marine terminal and
processing facilities.

Southern officials said last week they were willing to pay $2.6 billion to
help plug Sudan's budget deficit and would lobby for debt relief. Juba has
proposed a transit fee of about $1 per barrel.

Hassan said bridging the gap would be relatively easy once security issues,
especially rebel activity on both sides of the long and poorly-drawn border,
had been dealt with.

"The key to all this is security," he said. "Neither of the two countries
should support rebels in the other country ... oil comes second, actually."

To reach a deal, Juba must agree to stop supporting rebels in Sudan's South
Kordofan and Blue Nile border states, he said.

The two regions are home to tens of thousands of fighters who sided with the
south during the civil war but were left in the north after partition.
Fighting broke out again last year, with both sides blaming the other for
provoking the conflict.

Resolving the dispute means South Sudan will have to break its "historical
tie" with the rebels, Hassan said. "If they succeed in that, if they do have
the political will and they succeed, then I think things might work out."

Sudan's President Omar al-Bashir is set to meet his southern counterpart
Salva Kiir in Juba on April 3 to discuss issues including oil and the
conflict in the two border states. (Writing by Alexander Dziadosz; Editing
by Alistair Lyon)

C Thomson Reuters 2012 All rights reserved


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