* China biggest importer of S.Sudan oil (Adds quotes, background)
By Aaron Maasho
ADDIS ABABA, Jan 28 (Reuters) - Sudan will free ships carrying cargos of
crude it seized from South Sudan to ease tensions between the former civil
war foes and help the two states agree on a deal over oil revenue, Sayed
El-Khatib, deputy head of negotiating team said on Saturday.
"President Bashir is ready to make this gesture. Sudan is going to release
the vessels detained in Port Sudan," he told a media conference in the
Ethiopian capital.
South Sudan became independent in July under a 2005 peace agreement with
Khartoum that ended decades of conflict but both sides have failed to agree
how to untangle their oil industries.
The new landlocked nation needs to use a northern pipeline and the port of
Port Sudan to export its crude but has failed to reach an agreement with
Khartoum over a transit fee, prompting Sudan to start seizing oil as
compensation.
South Sudan said on Monday it had started shutting down oil production and
accused Sudan of seizing $815 million worth of crude.
South Sudan's top negotiator said on Friday his country would complete the
shutdown by Saturday, after 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.
Sudan said it was freeing the ships to help end the deadlock.
"By doing this step, we expect the cover agreement to be signed, the
shutdown to be halted, and the terms of the cover agreement to be
respected," said El-Khatib.
"Before the end of today, we could be able to sign the cover agreement. We,
at least, are ready to sign."
Officials said in November South Sudan was producing about 350,000 barrels
of oil per day.
China is the biggest buyer of oil from the two countries, some 12.99 million
barrels last year. That amounted to five percent of last year's crude
imports by China, which is also the top investor in South Sudan's oilfields.
(Writing by James Macharia; Editing by Toby Chopra)
ADDIS ABABA (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.
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 quoted Zenawi as saying.
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 January 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.
Zenawi 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.
Zenawi 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.
C Thomson Reuters 2012 All rights reserved
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Received on Sat Jan 28 2012 - 06:54:11 EST
