Sudan sees S. Sudan oil deal despite impasse

Sudan expressed optimism on Wednesday that a deal can be reached with its breakaway neighbour South Sudan on oil compensation, despite an impasse at the latest African Union-brokered talks.

Negotiations resumed this week in the Ethiopian capital Addis Ababa after the south accused Khartoum of committing "state piracy" which it said did not bode well for the talks.

"We cannot say that this round of negotiations failed until we see the progress tomorrow," foreign ministry spokesman Al-Obeid Meruh told reporters.

"We are not disappointed... We believe that we will reach a deal on this issue" eventually, he said.

Sudanese officials say they are taking some South Sudanese oil destined for export as compensation during a dispute over how much the south should pay for using the north's oil infrastructure.

"This is an act of state piracy on transit goods and is a grave violation of international law committed during what is supposed to be peacetime," South Sudan's top negotiator Pagan Amum told reporters in Addis Ababa on Tuesday.

He said the south had profound concerns that Sudan's "recent unilateral actions" will cause the talks to collapse.

Sudan's President Omar al-Bashir told a special envoy from Kenya that he is ready to meet his South Sudanese counterpart Salva Kiir later this month "because we want to solve the problems by negotiation," Meruh said.

The proposed meeting could take place at the January 23-30 African Union summit in Addis Ababa.

Sudan lost 75 percent of its oil production when South Sudan separated in July after a decades-long civil war that ended in 2005.

The vast majority of Khartoum's export earnings came from petroleum, leaving the government scrambling for ways to bolster its finances.

Although most of Sudan's oil is produced in the south, for now it can only be exported via the north, and the two countries disagree over how much Juba should pay for using the north's pipeline, port and other infrastructure.

In November Sudanese officials announced the country will take 23 percent of the south's vital oil exports as payment in kind during the fee dispute.

Ahead of talks in Addis Ababa this week the United States said it was "greatly concerned by recent Sudanese public threats and unilateral actions that impede the flow of oil from South Sudan," and urged north and south to reach agreement.

But Meruh said the talks "didn't start in a serious way" because the south failed to respond to Khartoum's demand for compensation of $36 per barrel.

The south has suggested paying a fee of 70 cents per barrel.

Meruh said Khartoum had only sent a political delegation to Addis Ababa, adding that technical experts would not go "unless there is progress."

Sudanese authorities stopped two ships loaded with 650,000 barrels of South Sudanese oil from leaving the export terminal about a week ago because they did not pay the port fees, according to the foreign ministry spokesman.

The Port Sudan oil storage tanks are also full, forcing authorities to hold diverted oil on two Sudanese tankers, Meruh said.