Sudan says thaw in relations may prevent South Sudan oil halt

Reuters News

7/31/2013 9:46:57 AM - Reuters News

By Richard Lough

NAIROBI (Reuters) - Sudan hopes it will not be forced to block vital crude exports from neighboring South Sudan after recent "good steps" made to end a row over alleged rebel support, Sudan's second vice president said on Wednesday.

Sudan, the sole conduit for South Sudan's oil exports, had threatened to shut down its pipelines by the end of July unless the Juba government gave up its support for rebels operating across their border. South Sudan denies the accusations and the Khartoum government has postponed the shutdown by two weeks to allow the African Union (AU) to investigate its complaints.

"The good relations and the good steps which have been taken in the last two weeks or so I think will help that oil to continue," Sudan's second Vice President al-Haj Adam Youssef told leaders from Africa's Great Lakes region at a summit in Kenya. "We hope that the oil will not be stopped again."

Youssef said Khartoum was "fully confident" rebels in southern Sudan were still receiving backing from South Sudan, which seceded from its northern neighbor in 2011. Juba too alleges Khartoum is supporting rebels in its Jonglei state.

Both Youssef and South Sudan's newly appointed foreign minister, who also spoke at the summit opening, welcomed the AU's intensified efforts to resolve the spat, including the naming of three generals to examine Sudan's allegations.

Kenyan Foreign Minister Amina Mohamed told Reuters the extended deadline was a "good sign."

"When we have made sure that the Republic of South Sudan has stopped its support for these rebels there is nothing that will stand in front of our good relations," Youssef said.

South Sudan depends almost entirely on oil exports for its government budget and diplomats fear a shutdown could undermine its stability.

A pipeline closure would also hurt Sudan's economy which needs South Sudan's payments of oil transit fees. Its currency fell last week to a record low against the dollar on the unofficial market after South Sudan itself reduced oil flows because of the festering dispute.

Nicodemus Ajak Bior, an oil ministry official in Juba, said South Sudan had ended its own gradual shutdown and was pumping around 160,000 barrels per day, a level still below the roughly 200,000 bpd it was producing before Sudan's closure threat.

South Sudan's foreign minister designate, Barnaba Marial Benjamin, again rejected Khartoum's accusations but said the two sides were still talking.

"We will remain in communication and dialogue with Khartoum."

Apart from oil, the neighbors have yet to decide on the ownership of Abyei and other disputed territories along their shared border.

(Additional reporting by Edmund Blair in Nairobi and Andrew Green in Juba; writing by Richard Lough; editing by Drazen Jorgic and James Jukwey)