(Adds comments from Petrodar and negotiator on shutdown)
By Yara Bayoumy and Aaron Maasho
ADDIS ABABA Jan 27 (Reuters) - The presidents of Sudan and South Sudan
failed on Friday to resolve an oil dispute that has led to the shutdown of
the South's crude output and threatened both countries' economies.
The row centres on how much landlocked South Sudan, which became independent
last year, should pay to send its oil exports through Sudan to a Red Sea
port.
Sudanese President Omar al-Bashir, using a walking stick, and South Sudan's
President Salva Kiir met on the sidelines of a meeting of East African
officials in Ethiopia.
The two discussed a deal that "would have frozen the situation and reverses
the unilateral actions that had been taken by both", a source close to the
talks told Reuters on condition of anonymity.
However, the source said the talks broke down when Kiir pulled out.
Ethiopian Prime Minister Meles Zenawi, who chaired the East African meeting,
said the two had agreed to sign a deal even though they had reservations on
numerous points, according to the source.
"Then Salva said, 'I regret to say that my delegation is still discussing
the deal and I can't sign'," the source said.
South Sudan seceded in July under a 2005 peace deal that ended decades of
civil war with Khartoum. It took with it about 75 percent of roughly 500,000
barrels per day of oil production.
Both countries depend heavily on oil and have put forward widely differing
figures for a possible transit fee. Sudan has publicly proposed $36 per
barrel, while South Sudan has listed figures under $1 per barrel.
The dispute heated up this month when Sudan said it was confiscating some
oil exports from South Sudan to make up for what it called unpaid fees. In
response, South Sudan said on Jan. 20 it was shutting down its output.
WELLS SHUT DOWN
South Sudan's oil minister Stephen Dhieu Dau said on Friday that his country
was continuing to shut down its oil output in protest at Sudan seizing part
of its oil shipments.
"Now 50 percent of the wells are off," he told reporters during a visit to
the Palouge oil field in Upper Nile state. However, he did not say whether
he was referring to the whole country or Upper Nile fields only.
In a sign of continuing acrimony, Dau also said Khartoum may have been
diverting some oil from the fields which lay on the southern side of the
border to feed its refinery in Khartoum. There was no immediate response to
the accusation from Sudan.
An official at Petrodar, a consortium of mainly Chinese and Malaysian firms
that produces much of South Sudan's oil output, said the company had shut
down around 250 of its wells, and expected to finish the shutdown in three
days.
"The progress is going very smoothly and safely. The programme is expected
to finish in three more days," Hago Bakheed Mahmoud, field operation manager
for Petrodar, told reporters.
Petrodar was still pumping between 145,000 and 150,000 barrels per day and
could resume its operations within three to four days if it was given
instructions to do so, he added.
TALKS COLLAPSE
The negotiations that could lead to a reversal of the shutdown "have reached
an impasse," South Sudan's chief negotiator Pagan Amum told reporters in
Addis Ababa.
"The mood was not good because imagine you're sitting with someone that's
stealing your property," he said, adding the South's output would cease by
Saturday and that only cleaning and flushing the facilities would remain
after that.
Sudan's negotiators did not immediately comment.
Ethiopian leader Meles said the two sides hadn't agreed on a deal yet, but
oil would stay on the agenda in Addis Ababa, where the leaders of Somalia,
Kenya and Ethiopia also met.
"It was agreed that the two parties will continue their negotiations during
the summit. We have not come to conclusion as yet," he told reporters.
Meles said an African Union mediating panel had proposed a "reversal of
unilateral measures" taken by both sides, but did not spell out what that
meant. "Many of those issues are agreed, but there are some sticking
points," he said.
According to oil industry sources, Sudan has already sold at least one cargo
of crude seized from South Sudan at millions of dollars discount, and is
offering more.
Sudan's civil war was fought for most years from 1955 to 2005 over issues of
ethnicity, religion, ideology and oil. An estimated 2 million people died in
the conflict.
Southerners voted overwhelmingly to secede in a referendum held last year in
January. (Reporting by Aaron Maasho and Yara Bayoumy; Additional reporting
by Hereward Holland in Palouge; Writing by Alexander Dziadosz; Editing by
David Stamp)
NAIROBI/PALOUGE, South Sudan Jan 27 (Reuters) - South Sudan's top negotiator
said his country would complete an oil production shutdown by Saturday,
after Sudan and South Sudan failed to agree on a deal to end an oil crisis.
Sudanese President Omar al-Bashir and South Sudan's President Salva Kiir met
on the sidelines of a meeting of East African officials in Ethiopia.
The two discussed a deal that "would have frozen the situation and reverses
the unilateral actions that had been taken by both", a source close to the
talks told Reuters.
But Pagan Amum told reporters in Addis Ababa: "Tomorrow the shutdown will be
complete and what will be remaining to be done the day after is finishing
the cleaning and flushing of facilities."
South Sudan is shutting down its oil production, last put by officials at
350,000 bpd in November, to protest against Sudan seizing some southern
shipments at the northern port of Port Sudan in a dispute over pipeline
fees.
Both countries depend heavily on oil and have put forward widely differing
figures for a possible transit fee. Sudan has publicly proposed $36 per
barrel, while South Sudan has listed figures under $1 per barrel.
The main operator Petrodar expects to close the key blocks 3 and 7,
officials said on Friday. Petrodar is a consortium comprising mainly Chinese
firms China National Petroleum Co (CNPC), Sinopec and Malaysian firm
Petronas. Analysts estimate its total oil output from South Sudan at 250,000
bpd.
"We have shut down almost around 250 (wells). Remaining are 390 oil wells.
The program is expected to finish in three more days. Maybe on 30 or 31 of
this month all oil wells in Ada, Gumri, Moleta and Palouge will be shut
down," Hago Bakheed Mahmoud, field operation manager for Petrodar, told
reporters at the Palouge oil fields.
He said current output was still between 145,000 and 150,000 barrels a day,
adding that the company could resume production within three to four days.
Blocks 3 and 7 provide much of South Sudan's output.
Oil Minister Stephen Dhieu Dau said the shutdown was going to plan.
"The shutdown is going well," Dhieu Dau told reporters during a visit to the
Palouge oil field in Upper Nile state. "Now 50 percent of the wells are
off," he said, without saying whether this was referring to only Upper Nile
fields or the whole country.
He spoke after the presidents of Sudan and South Sudan had met at the
African Union in Addis Ababa.
He said Khartoum may have diverted some oil from the fields which lay on the
southern side of the joint border to feed its refinery in Khartoum.
There was no immediate comment from Sudan which has said it was seizing an
unspecified amount of southern oil to use for its refineries in a dispute
over pipeline transit fees.
Sudan has also sold at least one cargo of crude seized from South Sudan at
millions of dollars discount to the official price charged by the South and
is offering more, industry sources have said. (Reporting by Hereward
Holland; writing by Ulf Laessing editing by Keiron Henderson)
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Received on Fri Jan 27 2012 - 20:42:55 EST
