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September 4, 2012 (TSR) – Sudan and South Sudan Tuesday resumed oil and border talks in Ethiopia’s capital Addis Ababa, hoping to reach a resolution that will pave the way to restart oil exports, South Sudan’s minister of information and broadcasts Benjamin Banarba said Tuesday.
The delegations from the two countries started talks Tuesday morning, Banarba said, adding he was unable to say “anything more than that.”
“There are a lot of issues still to be resolved, for example Sudan has not yet accepted the African Union roadmap, but we are hopeful that we shall strike a good deal,” he said over phone.
The two neighboring nations have been locked in a series of disputes since South Sudan’s secession in July last year.
South Sudan suspended oil production totaling 350,000 b/d in late January to stop Sudan from seizing its oil exports, but Sudan is understood to be still pumping some 50,000 b/d of oil, of which a portion has been sold on the export market recently, Platts has reported.
Prior to the shutdown, oil revenues accounted for nearly 98% of South Sudan’s annual budget.
After independence, the land-locked South took with it two-thirds of the unified country’s 500,000 b/d oil production capacity, but the pipelines and processing facilities remained in the north.
Last month, however, the two countries, under the facilitation of the African Union High Level Implementation Panel, reached a transit fee deal.
Under the deal, South Sudan was willing to pay $9.10/barrel for use of one major pipeline through Sudan and $7.26/b for another. The offer is higher than Juba’s earlier offers of around $1/b but lower than Sudan’s last demand of $36/b. Sudan’s offer also includes a financial package of $3.2 billion to help cover Khartoum’s gap in its budget due to oil revenue losses.
The United Nations Security Council on Friday urged Sudan and South Sudan to expedite and finalize the oil agreement to pave way for immediate resumption of oil production and transportation.
According to Banarba, the two countries were already on the right path to achieve UNSC’s demand.
“We have instructed oil companies to commence oil production and we know they are doing their best to achieve that in the soonest time possible, when they are ready we shall resume production,” he said.
However, if a deal on implementation of security arrangements failed, it could jeopardize the success achieved in the oil talks, Banarba said.
The UNSC has set a deadline of September 22 for the two sides to solve their issues or face sanctions.