South Sudan: Govt Talking in Bad Faith Over Oil - Bashir

4 January 2012

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South Sudan is negotiating in bad faith with Khartoum over oil fees and is threatening to "block" a pipeline transporting the crude, Sudan's President Omar al-Bashir said on Wednesday.

The South split from Sudan in July, taking with it 75 percent of the country's oil production of 470,000 barrels per day.

But crucial facilities including the pipeline and Red Sea export terminal remain in Sudan, leaving the two states arguing over how much the South should pay to use the infrastructure.

"The way the government of South Sudan behaves in the oil negotiations shows that they don't want to reach agreement," Bashir said in a meeting with members of parliament.

He said the South "is threatening to block the pipeline."

In November Sudanese officials announced the country will take 23 percent of the South's vital oil exports as payment in kind, and Bashir on Wednesday said that is being done on a monthly basis.

"We informed the government of South Sudan and the oil companies," he said.

Juba's oil minister, Stephen Dhieu Dau, said in December that any sale of southern oil confiscated by Sudan would be "an illegal act."

Khartoum was looking to charge the South $36 per barrel for the use of its oil infrastructure, in contrast to a Southern offer of 70 cents, a senior Sudanese official said in November.

The African Union is mediating talks between the two nations in Addis Ababa, where another round is scheduled for January 17.

Oil revenues make up almost all of the Juba government's income, while Khartoum lost the vast majority of its export earnings, which came from petroleum.

"The magnitude of the fiscal shock is expected to significantly increase in 2012 as the full extent of the oil revenue loss will be felt throughout the whole year. The loss of oil revenue will likely roughly double in 2012," the World Bank says of Sudan's economy.

After a near-unanimous vote, South Sudan gained independence in July last year following decades of civil war that ended in January 2005.

ANP/AFP

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