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Sudan Makes Concession in Oil Talks & No Deal in Sight

Source: Reuters 7/27/2012, Location: Africa

Sudan said it had made price concessions in oil talks with newly-independent neighbor South Sudan, but the two countries remained far apart on a deal to resolve disputes that have already brought them to the brink of war. A Sudanese oil ministry official said Khartoum had lowered the amount it wanted to charge to transport Southern crude through its territory - in a bid to settle one of a long list of arguments between the rivals.

South Sudan split away from Sudan last year as part of a peace deal that ended decades of civil war. But the two countries went their separate ways without agreeing on the details of dividing their oil industries, the position of their shared border and the ownership of disputed territories. Their armies have clashed a number of times since the secession.

South Sudan said during African Union-mediated talks it had increased the amount it was prepared to pay to transport its crude through two major pipelines to Port Sudan on the Red Sea. The offer from the landlocked South was for $9.10 per barrel for one pipeline and $7.26 per barrel for the other pipeline.

"We have come with a counter-proposal which we think is a step forward ... We are now offering $32.20 (for each pipeline)" the undersecretary of Sudan's oil ministry, Awad Abdelfatah, told Reuters at the talks venue in the Ethiopian capital Addis Ababa. Sudan had earlier demanded $36 a barrel for each pipeline plus back payments.

Both sides base their offers on conflicting and sometimes changing assumptions, making comparison to previous offers difficult. Abdelfatah said South Sudan's latest offer would leave Khartoum with less than a dollar for both pipelines as the bulk of the sum would go to the firms operating the facilities. A senior South Sudanese official in Addis Ababa dismissed Sudan's new offer as "nothing new".

Oil provides for about 98 percent of South Sudan's income. Juba is trying to develop infrastructure and institutions devastated by decades of war. South Sudan shut down 350,000 barrels per day of oil production in January after the north started seizing southern oil to make up for what it called unpaid export fees.

The latest round of talks, mediated by former South African President Thabo Mbeki, have also broken down several times over where to set up a demilitarized border buffer zone - seen as a first step to ending hostilities. Sudan has said it wants to make border security a priority at the talks. It accuses Juba of supporting rebels in two southern border states, a claim denied by South Sudan.

Abdelfatah said a security deal would have to precede any agreement on resumption of South Sudan's oil exports. "We have stated clearly that there will be no agreement on the transportation of petroleum or any other agreement unless we reach an agreement on security issues," he said. "The petroleum facilities are huge, big facilities that can easily be targeted and the border is a huge border so we need solid peace before we can start any petroleum operation."

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