Sudan lowers oil demand from S. Sudan: document

Sudan has lowered its demand for oil fees from South Sudan but insists border security must be ensured before any economic accord, a position paper said as diplomats prepared Friday to step up pressure for a deal by the two sides.

Khartoum publicly issued its position paper on Thursday, the day a United Nations deadline passed without agreement by Sudan and South Sudan on oil and other critical issues.

U.S. Secretary of State Hillary Clinton arrived on Friday in the South’s capital Juba and said the two Sudans must strike an urgent compromise deal to end bitter disputes, warning that the newly separated nations “remain inextricably linked.”

Sudan and South Sudan “will need to compromise to close the remaining gaps between them,” Clinton said, after meeting South Sudan’s President Salva Kiir.

Also on Friday, in the Ethiopian capital Addis Ababa, the African Union’s Peace and Security Council is to hear a report by Thabo Mbeki, who has mediated the talks ordered under a May 2 U.N. resolution.

Oil has been at the heart of tensions and economic difficulties for Sudan and South Sudan since the South separated in July last year with about 75 percent of Sudanese oil production worth billions of dollars.

Southern oil represented more than a third of Khartoum’s revenues and was its largest source of hard currency, leaving the government struggling for alternatives.

The landlocked South, which said oil provided 98 percent of its revenues, depended on the north’s pipeline and port to export its crude.

But the two sides could not agree on how much South Sudan should pay to send its crude north for export, leading the South in January to close off its oil production and prime source of income after accusing the north of theft.

Sudan had been seeking up to $36 a barrel in fees, but in the position paper released on Thursday said it was proposing $22.20 a barrel, compared with $7.61 offered by South Sudan.

In late July Khartoum said security issues must be settled first and turned down a proposal whereby Juba would pay up to $9.10 a barrel to send its oil through Sudan.

Months earlier, the South had proposed 70 U.S. cents a barrel.

In its position paper, Khartoum said the two sides had agreed South Sudan will pay Sudan a “transitional financial arrangement” of $3.028 billion over 42 months.

But Sudan said any deal on oil must be subject to a “full and final agreement” on security, to avoid obstacles in the movement of people, goods and services at the border.

Sudan accuses South Sudan of supporting insurgents on its territory, a charge which analysts believe despite denials by Juba, which in turn accuses Khartoum of backing rebels south of the border.

The two countries fought along their undemarcated frontier in March and April, sparking fears of wider war and leading to a U.N. Security Council resolution which ordered a ceasefire.

The resolution gave them until August 2 to settle the oil issue as well as the disputed border, the status of nationals of one country in the other, and the contested Abyei region.

The U.N. also told both sides to stop supporting each other’s rebels.

Although the Security Council allowed for possible sanctions in the absence of a settlement, diplomats said both sides will be given more time to pursue the fragile negotiations.

“Clearly Sudan and South Sudan have not fulfilled all the conditions laid down, although progress has been achieved,” said France’s U.N. ambassador Gerard Araud, the current president of the 15-nation council.