Sudan Ready to Release Detained Oil Tankers and Sign Oil Deal with South Sudan to End Oil Dispute

Posted: January 28, 2012 by PaanLuel Wël Media Ltd. in Economy

ADDIS ABABA, Ethiopia (AP) — Sudan will immediately release loaded oil tankers it had detained in its port, in an effort to end a dispute over oil payments with South Sudan, a Sudanese official said Saturday.

Landlocked South Sudan began halting oil production last week after accusing Sudan of stealing $815 million worth of the south’s oil. Sudan detained the oil tankers loading oil from the south in Port Sudan in response.

But Sudanese President Omar al-Bashir decided Saturday to “release the vessels detained in Port Sudan as soon as possible,” said Sayed al-Khatib, a spokesman for Sudan’s negotiation team.

Al-Khatib also said al-Bashir is ready to sign an agreement with South Sudan’s president Salva Kiir “by the end of today”.

Al-Khatib said all parties were ready to sign a deal alongside a meeting of East African leaders on Friday in Ethiopia’s capital Addis Ababa.

“This would have meant that we could leave the crisis behind us,” he said.

But a South Sudan official said Friday that talks between Kiir and al-Bashir to end an oil dispute had failed because of Sudan’s “continued stealing of oil”.

Pagan Amum, secretary general of South Sudan’s ruling party, said South Sudan would now “turn east” to export its oil to Kenya and Ethiopia.

South Sudan has already signed a memorandum of understanding with Kenya to build a pipeline from its oil fields to Kenya’s northern coast, where a new port is planned.

South Sudan, which broke away from its northern neighbor Sudan on July 9 last year, said it had also approached Ethiopia about developing a new pipeline that would go through Ethiopia to a port in the tiny nation of Djibouti.

Amum said the two would only end their dispute if Sudan “reimburses the full amount of stolen goods”.

Sudan claims it is entitled to the South Sudanese oil it has taken because it has not received any transit fee payment after the two countries split.

“If it is proven that we have taken one barrel more than the equivalent in kind that is something we have to be held responsible for,” al-Khatib said.

The oil negotiations between the two neighbors have been in a deadlock for two years. They have never agreed on the transit fees South Sudan should pay to Sudan for using its infrastructure of port and pipelines.

A shutdown means both countries risk losing hundreds of millions of dollars. Sudan also risks losing future revenue if South Sudan builds new pipelines that do not cross its territory.

Sudan says to release ships seized from South Sudan
By Aaron Maasho
ADDIS ABABA | Sat Jan 28, 2012

ADDIS ABABA (Reuters) – Sudan will free ships carrying cargos of crude it seized from South Sudan to ease tensions between the former civil war foes and help the two states agree on a deal over oil revenue, Sayed El-Khatib, deputy head of negotiating team said on Saturday.

“President Bashir is ready to make this gesture. Sudan is going to release the vessels detained in Port Sudan,” he told a media conference in the Ethiopian capital.

South Sudan became independent in July under a 2005 peace agreement with Khartoum that ended decades of conflict but both sides have failed to agree how to untangle their oil industries.

The new landlocked nation needs to use a northern pipeline and the port of Port Sudan to export its crude but has failed to reach an agreement with Khartoum over a transit fee, prompting Sudan to start seizing oil as compensation.

South Sudan said on Monday it had started shutting down oil production and accused Sudan of seizing $815 million worth of crude.

South Sudan’s top negotiator said on Friday his country would complete the shutdown by Saturday, after Sudanese President Omar al-Bashir and South Sudan’s President Salva Kiir met on the sidelines of a meeting of East African officials in Ethiopia.

Sudan said it was freeing the ships to help end the deadlock.

“By doing this step, we expect the cover agreement to be signed, the shutdown to be halted, and the terms of the cover agreement to be respected,” said El-Khatib.

“Before the end of today, we could be able to sign the cover agreement. We, at least, are ready to sign.”

Officials said in November South Sudan was producing about 350,000 barrels of oil per day.

China is the biggest buyer of oil from the two countries, some 12.99 million barrels last year. That amounted to five percent of last year’s crude imports by China, which is also the top investor in South Sudan’s oilfields.

(Writing by James Macharia; Editing by Toby Chopra)

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