By Khalid Abdelaziz and Hereward Holland
KHARTOUM/JUBA (Reuters) - Sudan and South Sudan have not yet agreed on how to demilitarize their border - a condition for resuming oil flows, Khartoum said on Monday, but denied it was deliberately delaying the economically vital trade.
Newspaper reports about a possible oil export delay knocked the Sudanese pound to a historic low against the dollar, illustrating the importance for both countries of getting oil from landlocked South Sudan's fields via the north for export.
"Sudan has not notified South Sudan that it is not ready to receive southern oil exports through its territory," foreign ministry spokesman El-Obeid Morawah said when asked about news reports in the past two days.
He said both sides had yet to set up a demilitarized border zone that they agreed in September had to be in place first.
"The security teams on both sides have agreed to urge both security sides, in Khartoum and Juba, to speed up implementing the security agreements," he said.
South Sudan's government could not be reached for comment.
In January, South Sudan shut down its entire output of 350,000 barrels a day after tensions with Sudan over export fees escalated.
Having come close to war in April, the neighbors agreed to an African Union-brokered deal on export fees in September and to pull their armies 10 km (6 miles) back from the ill-defined border.
Any delay to a resumption of the oil trade would be a serious blow to both countries. Sudan benefits from South Sudan's oil exports because Juba has to pay a fee for using northern pipelines and a Red Sea port.
Last month, South Sudan's oil ministry said it had ordered oil firms to turn on wells to start exports within three months as pipelines and oilfields needed to be prepared first.
Oil industry sources there said the oil companies, mainly from China, Malaysia and India, were still ready to pump.
"If Khartoum stops dishonoring their agreement then we can start, even tomorrow," said Farouk Gatkuoth, deputy chairman of Sudd Petroleum, a 50-50 joint-venture between Petronas and South Sudan's state-owned Nilepet.
Ongoing fighting between Sudan and rebels in its southern borderlands has hampered the plan to set up a border zone and the state news agency SUNA said on Monday that rebels from the Darfur region had set up camp in a disputed border region.
Sudan's army spokesman al-Sawarmi Khalid told SUNA rebels from Darfur had set up camp just 10 km from the border in a disputed strip of land called Samaha, or Miles-14, that was a major obstacle during the September talks.
For their part, rebels of the Sudan People's Liberation Movement-North (SPLM-North), which have formed an alliance with Darfur rebels to topple Sudan's President Omar Hassan al-Bashir, accused the air force of bombing two villages on Saturday and Monday on the Sudan side of the border.
Sudan accuses South Sudan of supporting the SPLM-North, charges diplomats find as credible as claims from Juba that Khartoum is backing rebels on its territory.
(Writing by Ulf Laessing; Editing by Robin Pomeroy)
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