South Sudan begins legal steps to track oil sold by Sudan

JUBA (Reuters) - South Sudan has started legal steps to track down oil seized and sold by Sudan in a row between the two countries over oil payments, a government spokesman said on Friday.

The landlocked African nation needs to export its crude through Sudan but both nations have failed to agree on a transit fee, prompting Khartoum to seize some southern oil. Sudan has sold at least one oil cargo, industry sources have told Reuters.

South Sudan has responded by shutting down its entire output of 350,000 barrels per day. Juba accuses Khartoum of seizing 6 million barrels since December.

"The ministry of petroleum has notified the ministry of justice and has issued a legal notice internationally through our legal international consultants to track down this oil and has reported that this is stolen oil," government spokesman Barnaba Marial Benjamin told reporters after a cabinet meeting.

He also said the government was investigating whether Chinese oil firms operating in South Sudan have helped Khartoum to seize oil.

"Once it is proven through an investigation definitely the government of the Republic of South Sudan will take steps," he said, without elaborating.

State oil firms from China, India and Malaysia own majority shares in the three consortiums extracting oil in South Sudan. China is the biggest buyer of South Sudanese oil and has built the most oil facilities in both countries.

Oil talks between Sudan and South Sudan sponsored by the African Union in Ethiopia will resume on February 23 but Barnaba said Khartoum was undermining negotiations by having bombed a disputed border region this week. Sudan denies this.

Barnaba also said Sudan was trying to secure development loans on international markets using natural resources such as oil and its agricultural potential as guarantee.

"South Sudan is the only country that has no debt ... Even the United States they borrow money, Britain borrows so why can't we borrow?," he said, without giving a timeframe or targeted volumes.

(Editing by James Jukwey)