Saturday, January 28, 2012

Rival Sudanese leaders fail to resolve oil row - Yahoo!7

Updated January 28, 2012, 5:12 am

ADDIS ABABA (AFP) - Sudanese President Omar al-Bashir and his South Sudan counterpart Salva Kiir failed to resolve a dispute over oil after day-long negotiations hosted by an African peace bloc Friday in Ethiopia.

The two leaders met amid heightened tensions after the South accused Khartoum of stealing $815 million worth of crude oil. Sudan admits to taking oil from the South, but says it was to compensate for export fees and use of its refineries.

"There are some sticking points... in general terms I believe there is quite a lot of progress but not enough for us to be able to clinch a deal now," said Ethiopian Prime Minister Meles Zenawi.

Meles is the current chair of the regional bloc, Inter-Governmental Authority on Development. Kenyan President Mwai Kibaki, Somali leader Sharif Sheik Ahmed and Djibouti's Ismael Omar Guelleh also attended the talks.

Juba this week began to halt oil production after it ordered a complete shutdown owing to the dispute with Khartoum, a former civil war foe. Over half the wells are now shut down, the South says.

The leaders proposed a deal to reverse unilateral decisions by the two countries and to work on signing a comprehensive agreement, Meles said, adding that the talks would continue at an African Union summit starting Sunday.

Bashir and Kiir left the meeting separately and refused to comment.

South Sudan split from Sudan in July, taking with it three quarters of the country's oil, which makes up more than 90 percent of the South's revenue.

Landlocked South Sudan signed an agreement with Kenya Tuesday to build an oil pipeline to a Kenyan port, potentially freeing it its dependence of exporting oil through Sudan.

However, industry experts have said that building a pipeline could take more than three years and cost as much as $4 billion -- a staggering cost for the South, where oil production is already close to peaking.

South Sudan has also approached Ethiopia to build a pipeline connecting to the Red Sea state of Djibouti.

Earlier this month, South Sudan signed its first oil deals with foreign nations since it won independence last July, inking agreements with Chinese, Indian and Malaysian firms.

The deals, which replace deals signed with Khartoum under a unified Sudan, cover oil production in the two key petroleum states of Unity and Upper Nile.

Khartoum also opened bids to international companies days after the South penned its deals.

After South Sudan gained its independence in July, Sudan, which also depends on oil, was scrambling for ways to bolster its finances.

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