Sudan denies reports it will delay southern oil exports

Reuters News

11/19/2012 1:01:07 PM - Reuters News

By Khalid Abdelaziz and Hereward Holland

KHARTOUM/JUBA (Reuters) - Sudan denied reports in several local newspapers it had decided to delay resuming oil exports from South Sudan through its territory due to unresolved border issues, the foreign ministry said on Monday.

South Sudan and Sudan agreed in September to resume oil exports from the landlocked South through northern pipelines after reaching an agreement on export fees and border security.

But neither side has implemented a planned demilitarized buffer zone along the unmarked border, prompting newspapers in both countries to speculate that the oil exports will be delayed.

"Sudan has not notified South Sudan that it is not ready to receive southern oil exports through its territory," El-Obeid Morawah, spokesman for the foreign ministry, told Reuters.

He said both sides had agreed to speed up implementing the buffer zone deal to avoid high costs as South Sudan had already started technical preparations to resume exports.

South Sudan's oil ministry could not be reached for comment but oil industry sources in the new African country said the oil firms were ready to pump exports.

"As technocrats we are ready. We are just waiting for the politicians," said an oil industry source.

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 needed to be prepared first.

Oil is the lifeline for both countries struggling with severe economic crises. South Sudan has to pay a fee to Sudan for using northern pipelines and the Red Sea port of Port Sudan.

Uncertainty over the oil exports has knocked down the Sudanese pound to a historic low against the dollar. On Monday, a dollar bought 6.3 pounds on the key black market, compared to 6 last week, dealers said. The official rate stands around 4.4.

In January, South Sudan shut down its entire output of 350,000 barrels a day after tensions with Sudan over export fees escalated.

While both sides reached an agreement over oil export fees in September they yet need to sort out ownership of disputed regions along the unmarked border, one of several issues left over from South Sudan's messy secession in July 2011.

To defuse immediate tensions the African Union brokered a deal to set up a buffer zone. But ongoing fighting between Sudan's army and rebels in its southern borderlands has hampered the implementation of the agreement.

Sudan accuses South Sudan of supporting the rebels, charges diplomats find as credible as claims from Juba that Khartoum is backing rebels on its territory.

South Sudan became independent last year under a 2005 peace agreement with Khartoum which ended decades of civil war between the mainly Muslim north and the South where most follow Christian and African beliefs.

(Reporting by Khalid Abdelaziz in Khartoum and Hereward Holland in Juba; Writing by Ulf Laessing, editing by William Hardy)