US urges South Sudan, Sudan to settle oil dispute

The United States urged Sudan and South Sudan to redouble efforts to resolve a crisis over fees for oil transfers and said it supported a proposal by African Union mediators.

The statement by State Department spokeswoman Victoria Nuland came a day after South Sudan ordered a shutdown of its oil production because Sudan has seized oil transiting its territory.

She said Washington supports the African Union High-Level Implementation Panel's roadmap for an agreement to resolve the crisis and set a timeline for a final oil and financial agreement between the two countries.

"We further urge the parties to redouble their efforts to reach an agreement on permanent oil and financial arrangements as the impending crisis threatens not only the flow of oil but also long term damage to infrastructure," she said.

"Therefore an agreement that addresses the current crisis has become necessary and is in the interests of both countries," Nuland said.

She said resumption of normal oil shipments was critical to stabilize the economies of both countries.

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 despite its oil wealth, the new state of South Sudan lacks the infrastructure to refine and export oil.

Crucial facilities including a 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.

Sudanese authorities recently stopped two ships loaded with 650,000 barrels of South Sudanese oil from leaving the export terminal because they did not pay the port fees, according to Khartoum's foreign ministry.