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Pipes at Heglig oilfield
Image: Reuters

Sudan oil deal confirmed

August 4, 2012

Sudan has confirmed that it has reached an oil agreement with its neighbor, South Sudan. But it said security issues had to be clarified before implementing the deal.


The agreement on how much landlocked South Sudan should pay to export its oil through Sudan was announced early on Saturday by African Union mediator Thabo Mbeki.

Sudanese state news agency SUNA quoted oil official Awad Abdul Fatha, as saying: "We have reached a final agreement with South Sudan on oil transit, and we expect to settle other files under negotiation."

The spokesman for the Sudanese delegation, Mutrif Siddig, told SUNA: "The agreement does not fulfill the ambitions of both sides. Its implementation will start after understandings on security issues."

The SUNA report did not give details of the agreement.

The deal came two days after the expiry of a UN Security Council deadline for the two countries to resolve their differences after border clashes in April brought them close to full-scale war. The fighting centered on the disputed Heglig oil fields.

US President Barack Obama praised the agreement as a step forward. Washington played an instrumental role in South Sudan's July 2011 secession from Sudan.

"This agreement opens the door to a future of greater prosperity for the people of both countries," Obama said in a release.

"The leaders of Sudan and South Sudan deserve congratulations for reaching agreement and finding compromise on such an important issue, and I applaud the efforts of the international community, which came together to encourage and support the parties in finding a resolution."

"Oil will flow"

Mbeki told reporters after the talks that "the parties have agreed on all of the financial arrangements regarding oil, so that's done." Mbeki said South Sudanese oil production and export - only possible via Sudanese pipelines - would resume.

"The oil will be flowing," he said, without specifying when. Mbeki also did not offer details about the transportation and processing prices involved, with both sides far apart on transit fees in the run-up to the talks.

South Sudan's last public offer was to pay $9.10 (7.35 euros) and $7.26 per barrel to export through two Sudanese pipelines, alongside a $3.2 billion compensation fee for the oil reserves lost by Sudan when South Sudan was declared an independent country last year.

Sudan and South Sudan solve oil dispute

Sudan, meanwhile, had drastically lowered its desired price for oil transportation recently, suggesting a flat fee of $15 per barrel, having long held out for $36 per barrel. A barrel of Brent Crude oil currently trades at around $109.

South Sudan shut down its oil production in January, severely impacting its own economy and that of its northern neighbor.

Border demarcation still disputed

South Sudan received roughly two-thirds of Sudanese oil reserves when it split from Khartoum, but Sudan retained control of pipelines and processing facilities in the region.

The two countries continue to dispute their ill-defined borders, having gone ahead with the split before reaching a consensus on territorial issues as well as oil transit prices. African Union mediators have been trying to draw up a demilitarized buffer zone between the two countries, a move seen as the first step towards a border deal.

Heglig oilfield after a bombing raid by Sudanese warplanes
Heglig oilfield was the target of bombing raidsImage: AP

South Sudan's top negotiator Pagan Amum had called on an independent arbitration body to set the border, also accusing Sudan of maintaining a police force in the disputed Abyei border region, after the UN had asked both sides to withdraw all their forces.

Mbeki said that Sudan's President Omar al-Bashir and his southern counterpart Salva Kiir would meet next month to talk about the area.

"We have informed [the AU] that there has been agreement between the parties that the matter of the final status of Abyei will be addressed at the next summit meeting of the presidents," Mbeki said Saturday.

South Sudanese President Salva Kiir greets US Secretary of State Hillary Clinton in Juba
Clinton met Kiir in Juba on an African tourImage: picture-alliance/dpa

US Secretary of State Hillary Clinton had met Salva Kiir in Juba on Friday, urging the new neighbors to reach an accord and warning that despite their recent division, they "remain inextricably linked."

Sudan was rocked by over two decades of civil war until 2005, with over 2 million casualties. Southern independence, sealed after a referendum, was a part of the peace accord.

tj,msh,slk/ccp (AFP, Reuters)

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