Sudan denies confiscating independent South's oil

BEIJING (Reuters) - Sudan denounced suggestions that it was confiscating oil from South Sudan on Tuesday and indicated that the newly independent South was responsible for stonewalling an oil deal between the two nations.

South Sudan became Africa's newest nation in July under a 2005 peace deal that ended decades of civil war, but many issues remain unresolved, including oil, debt and violence on both sides of the poorly defined border.

Tension escalated in January after Khartoum began taking oil from its landlocked southern neighbour, which exports its crude through Sudan's pipelines to a port on the Red Sea.

South Sudan shut down its entire oil production of 350,000 barrels a day in protest.

Sudan Foreign Minister Ali Ahmed Karti denied "confiscating" the oil, saying the South had used Sudan's facilities, equipment and ports without "paying a penny".

"This is not the right word to be used here," he told reporters. "We are not confiscating anything. Think of that, we gave everything. We gave the secession of the south, we helped everything. We gave them, according to the agreement, the whole facilities and oil within that territory.

"You can use your own Western intelligence to know to whom I sold my oil," he said. "This is my oil."

"SOMETIMES THEY NEVER SHOW UP"

Karti said the African Union held the key to solving the oil impasse and invited China National Petroleum Corp , Malaysia's Petronas and India to help mediate.

The African Union sponsored talks between Khartoum and Juba in January. The two sides were meant to conclude an oil agreement that would have both sides sharing revenues, with the South paying fees to export its oil through Sudan.

Having failed to reach an agreement on transit fees, Khartoum started seizing South Sudan's oil and has sold at least some of it, industry sources have told Reuters.

Talks are expected to resume in early March but diplomats say it is hard to envision a mutually acceptable compromise.

"Sometimes they never show up," Karti said, referring to the South's representatives. "Sometimes they show up at the meetings and the mediator did not find any kind of assistance from their side. Sometimes they do not deliver anything."

Diplomats say China, the biggest investor of oil facilities in both countries, has the best chance of brokering a deal. Beijing sent an envoy to both nations in December to help bridge differences.

Karti said he had assured China that Sudan would safeguard Chinese workers and investments, weeks after the kidnapping of 29 Chinese workers in the main oil-producing state of South Kordofan where Khartoum has been fighting insurgents.

Most Western firms have shunned Sudan since it was indicted by the International Criminal Court in the Hague for war crimes and genocide. China, having maintained close ties throughout a U.S. trade embargo and acted as Khartoum's top arms supplier, opposes the indictment.

Sudan was also the sixth-largest source of Chinese oil imports in 2011 and the tricky transit and pipeline arrangement gives Beijing an incentive to promote good relations between the two Sudans. In December, it sent an envoy to both nations to help bridge differences.

Chinese Vice President Xi Jinping told Karti China was "worried" about the escalating tensions between Sudan and South Sudan, adding that he hopes both countries will "properly handle the dispute at an early date," Foreign Ministry spokesman Hong Lei told reporters.