South Sudan says new demands from Sudan delay oil restart - Reuters

Landlocked South Sudan, which seceded from Sudan in July last year, shut down its roughly 350,000 barrels per day of oil output in January in a dispute with Khartoum over how much it should pay to export oil through Sudan to the Red Sea.

In September, the African Union managed to broker several deals between the neighbors to defuse hostilities after both came close to war in April. The two agreed on oil export fees and to improve border security, opening the way to resuming crude exports, the lifeline of both economies.

Local newspaper reports suggesting the restart would be delayed have sent the Sudanese pound to a historic low against the dollar in the past few days, highlighting the importance to restart oil exports.

On Monday, Sudan denied intentionally delaying the trade but said the two sides had not yet agreed on how to demilitarize their border - a condition for resuming oil flows.

Kiir, addressing supporters and reporters in Melut town in the oil-producing Upper Nile state on Tuesday, suggested the delay was related to rebellions in two Sudanese regions - Blue Nile state and the Nuba Mountains in South Kordofan state.

"We were supposed to resume oil production on November 15, five days ago. Suddenly Khartoum people changed their minds, saying we must denounce the Nuba Mountains and Blue Nile," Kiir said.

Khartoum accuses Juba of backing the rebel Sudan People's Liberation Movement North (SPLM-N), which fought alongside the southern insurgents during Sudan's decades-long civil war but were left in Sudan with partition.

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South Sudan denies supporting the SPLM-N, which plans to together with rebels from the western region of Darfur to topple Sudan's veteran President Omar Hassan al-Bashir.

"The people (of Khartoum) are looking for an excuse for their defeat in Nuba Mountains and Blue Nile," Kiir said.

Sudan and South Sudan agreed in September to set up a 10-kilometer (6 mile) border zone from which both armies would withdraw.

But a recent pickup in fighting between the SPLM-N troops, which control parts of the border, and government forces has hampered plans for the buffer zone. The rebels shelled in the past few weeks South Kordofan's main oil city Kadugli, an embarrassment for the much better equipped Sudanese army.

Kiir gave no new date for restarting oil output. Under previous government plan exports were to expected to hit markets by the end of December or early January as pipelines needed to be prepared first following the shutdown.

Both Sudan and South Sudan - which split apart under a 2005 peace deal - depend heavily on oil for government revenues and foreign currency.

Inflation hit 45 percent in October in Sudan as the African country mainly relies on imports, even for basic food items.

South Sudan, where oil revenues made up 98 percent of state revenues, suffers from a severe shortage of dollars. Last week, a Kenyan airline grounded its entire fleet because it was unable to convert $2 million made from local ticket sales into dollars.

Kiir earlier set the foundation stone for South Sudan's first refinery, which will have a capacity of 10,000 barrels a day, as the country wants to lower dependency from Sudan's oil facilities.

(Reporting by Hereward Holland; writing by Alexander Dziadosz and Ulf Laessing; editing by James Jukwey and Sofina Mirza-Reid)

Landlocked South Sudan, which seceded from Sudan in July last year, shut down its roughly 350,000 barrels per day of oil output in January in a dispute with Khartoum over how much it should pay to export oil through Sudan to the Red Sea.

In September, the African Union managed to broker several deals between the neighbors to defuse hostilities after both came close to war in April. The two agreed on oil export fees and to improve border security, opening the way to resuming crude exports, the lifeline of both economies.

Local newspaper reports suggesting the restart would be delayed have sent the Sudanese pound to a historic low against the dollar in the past few days, highlighting the importance to restart oil exports.

On Monday, Sudan denied intentionally delaying the trade but said the two sides had not yet agreed on how to demilitarize their border - a condition for resuming oil flows.

Kiir, addressing supporters and reporters in Melut town in the oil-producing Upper Nile state on Tuesday, suggested the delay was related to rebellions in two Sudanese regions - Blue Nile state and the Nuba Mountains in South Kordofan state.

"We were supposed to resume oil production on November 15, five days ago. Suddenly Khartoum people changed their minds, saying we must denounce the Nuba Mountains and Blue Nile," Kiir said.

Khartoum accuses Juba of backing the rebel Sudan People's Liberation Movement North (SPLM-N), which fought alongside the southern insurgents during Sudan's decades-long civil war but were left in Sudan with partition.

MORE FIGHTING

South Sudan denies supporting the SPLM-N, which plans to together with rebels from the western region of Darfur to topple Sudan's veteran President Omar Hassan al-Bashir.

"The people (of Khartoum) are looking for an excuse for their defeat in Nuba Mountains and Blue Nile," Kiir said.

Sudan and South Sudan agreed in September to set up a 10-kilometer (6 mile) border zone from which both armies would withdraw.

But a recent pickup in fighting between the SPLM-N troops, which control parts of the border, and government forces has hampered plans for the buffer zone. The rebels shelled in the past few weeks South Kordofan's main oil city Kadugli, an embarrassment for the much better equipped Sudanese army.

Kiir gave no new date for restarting oil output. Under previous government plan exports were to expected to hit markets by the end of December or early January as pipelines needed to be prepared first following the shutdown.

Both Sudan and South Sudan - which split apart under a 2005 peace deal - depend heavily on oil for government revenues and foreign currency.

Inflation hit 45 percent in October in Sudan as the African country mainly relies on imports, even for basic food items.

South Sudan, where oil revenues made up 98 percent of state revenues, suffers from a severe shortage of dollars. Last week, a Kenyan airline grounded its entire fleet because it was unable to convert $2 million made from local ticket sales into dollars.

Kiir earlier set the foundation stone for South Sudan's first refinery, which will have a capacity of 10,000 barrels a day, as the country wants to lower dependency from Sudan's oil facilities.

(Reporting by Hereward Holland; writing by Alexander Dziadosz and Ulf Laessing; editing by James Jukwey and Sofina Mirza-Reid)