Sudan Deal to Resume Oil Exports

KAMPALA, Uganda - Former civil war foes Sudan and South Sudan have signed a deal to resume crude shipments from the landlocked South through Sudanese pipelines and ports within two weeks, just days after both sides started withdrawing troops from the common border, officials said Tuesday.

According to Barnaba Benjamin, South Sudan's information minister, the deal was reached at African Union-mediated talks in Addis Ababa, the Ethiopian capital, following the creation of a demilitarized zone along the poorly marked common border.

The deal will unlock at least 350,000 barrels-a-day of crude exports from South Sudan, which are needed by both countries to heal their economies that have been struggling without the oil shipments for more than a year now.

"This is another step forward, and we shall start preparing our facilities to resume exports," Mr. Benjamin said.

A Sudanese government spokesman confirmed the development.

On Sunday, the countries started withdrawing thousands of troops along the common border to create a 20-kilometer buffer zone, a condition for the resumption of exports.

South Sudan separated from Sudan in July 2011 following a two-decade civil war, retaining around 75% of the oil fields. However, the landlocked nation has to rely on ports and pipelines in the north to ship its crude to refiners, mainly in China and Malaysia.

South Sudan halted crude shipments in January last year amid a bitter spat with Sudan over oil transit fees as well as contested oil-rich regions along the poorly marked 1,120-mile border.

The two countries nearly went to war early last year, prompting the African Union to convene urgent negotiations over a string of disputes. In September last year, the presidents of the two countries signed nine pacts to normalize relations and resume oil shipments, but the agreements weren't put into effect until this week mainly due to mistrust springing from a history of broken agreements.


Copyright (c) 2012 Dow Jones & Company, Inc.


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