* Juba calls for arbitration to solve frontier dispute
* Wants referendum in contested Abyei area (Adds detail, Abyei offer, Sudan
wanting security deal first)
By Aaron Maasho and Hereward Holland
ADDIS ABABA/JUBA, July 24 (Reuters) - South Sudan is offering Sudan a $3.2
billion compensation package to help plug its rival's gaping budget deficit
and higher oil export fees in an attempt to revive stalled talks, a senior
southern official said on Monday.
But Sudan insisted it wanted to agree on border security first before
discussing any oil or financial deal, in the latest setback for African
Union efforts to end hostilities.
Both countries came close to all-out war when border fighting escalated in
April, the worst violence since South Sudan declared its independence from
Sudan a year ago.
The duo's messy divorce was part of a peace deal that ended decades of civil
But the split left a long list of unresolved disputes over the position of
their shared border, how much South Sudan should pay to transport its oil
through Sudan, and other issues.
Pagan Amum, South Sudan's chief negotiator, said Juba tabled its "last
offer" on Sunday ahead of an Aug. 2 U.N. Security Council deadline that
threatens sanctions against the two countries unless they resolve all
The proposal includes compensation of $3.2 billion, up from a previously
offered $2.6 billion, to help Sudan make up for the loss of three-quarters
of its oil production when South Sudan split away. Oil was Sudan's main
source of revenues.
Juba also said it would forgive $4.9 billion - both for what it calls
overdue oil payments before independence, and for oil confiscated after
independence by Sudan. Sudan took some southern oil after failing to agree
on a fee, prompting Juba to turn off all wells in January.
Landlocked South Sudan also offered to pay $9.10 and $7.26 per barrel to
transport oil through two Sudanese pipelines. Southern officials said both
figures were higher than an earlier offer but they were still short of
Khartoum's last demand of $36 a barrel for both pipelines.
"This is our last offer. We are left with nine days (before the U.N.
deadline). It's time for the parties to conclude an agreement," Amum told
Sudan insisted it wanted to discuss border security first before any oil
deal. "This (security) is a priority that has been set by the agreement of
the two parties and by the facilitation of the mediation," said Mutrif
Siddiq, spokesman for Sudan's delegation in Addis Ababa where talks take
He also disputed Juba's figures and said Sudan owed no money to the South.
"It (the offer) was meant to inflate the amount of money that South Sudan
wants to say it has paid (for oil transportation in the past)," he said.
Sudan accuses South Sudan of supporting rebels in two southern border states
and the Darfur region, a claim that some diplomats find credible despite
denials from Juba.
South Sudan itself accuses its neighbour of bombing its territory. Sudan
routinely denies these claims but Reuters reporters have witnessed several
Diplomats had hoped a meeting by Sudan's President Omar Hassan al-Bashir
with his southern counterpart Salva Kiir on the sidelines of an AU summit a
week ago would give talks a push.
But Amum said they are yet to make progress. Talks have broken down several
times over where to set up a demilitarized border buffer zone - seen as a
first step to ending hostilities.
Amum said he wanted an arbitration body to resolve a dispute over the
position of their shared border.
"We favour international arbitration. This, we believe, is the best amicable
way," Amum said.
Sunday's offer also includes a new proposal to hold a referendum, organised
by the AU and the United Nations, on the status of the disputed Abyei
region. (Additional reporting by Ulf Laessing in Khartoum; Editing by Andrew
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Received on Tue Jul 24 2012 - 12:44:05 EDT