Business
By Mading Ngor
JUBA, Aug 7 (Reuters) - South Sudan hopes to resume oil production in September after reaching an interim agreement with Sudan on oil export fees, but it may take a year to return to full capacity, its top negotiator said on Tuesday.
The two countries agreed on Friday on how much South Sudan should pay to export its oil through northern pipelines, ending a dispute that led to the shutdown in January of South Sudan's output of 350,000 barrels per day.
The deal marked a step towards ending hostilities between the African nations, which came close to a war in April when border fighting escalated in the worst violence since South Sudan became independent a year ago.
Sudan still wants to reach an agreement on border security, however, before allowing its landlocked neighbour to export oil through its territory. Both nations need to mark their 1,800 km (1,200 miles) border, a tricky issue since much of it isdisputed.
Pagan Amum, South Sudan's lead negotiator with Sudan at theAfrican Union, said oil production would restart aroundSeptember, especially in the Upper Nile state fields whichcontributed to much of the country's previous output.
"We're expecting to begin production immediately inSeptember, especially for the Upper Nile oil, of Dar Blend,"Amum said in an interview in South Sudan's capital.
"We expect, of course, to develop the capacity in time. Itwill not just be an automatic thing. It will take time to openone well after the other," he said.
"The production will begin from 150,000 (bpd)... and withinthree, four months, it would go to 180,000, 190,000 (bpd), andthen it will go to the (old) level, and possibly higher than thetime (before shutdown) within one year," he said.
Oil is the lifeline of both economies, especially of thewar-torn South where it made up 98 percent of state income.Sudan is also suffering, with protests springing up againstrising food prices as the government struggles to fund imports.
Industry sources said it might take six months to fullyresume production, because the pipelines were filled with waterto avoid gelling and some wells were not closed properly.
China was the biggest buyer of South Sudanese oil before theshutdown, and Chinese state firms are the biggest oil operatorsin the world's youngest nation.
BORDER SECURITY
Both countries plan to resume talks in Addis Ababa at theend of August to agree on their border and improve bordersecurity. Little progress has been reached so far as both sidesaccuse one another of supporting rebels in the other'sterritory.
Amum said South Sudan was ready to reach a security deal toestablish normal relations and cross-border trade with Khartoum,which the South had fought during decades of civil war.
Striking a more optimistic tone than late on Friday when theoil deal was announced, Amum said: "We're aiming at acomprehensive deal ... We will establish the demilitarized zone,we will deploy monitors."
He added, "We will ensure full compliance by the twocountries of non-interference in the affairs of the other."
Juba accuses Sudan of often bombing its territory.
Sudan accuses Juba of supporting rebels of the SudanPeople's Liberation Movement (SPLM-North), who are fighting theSudanese army in the two border states of South Kordofan andBlue Nile.
Amum denied that allegation but admitted that South Sudanshowed what he described as "solidarity" with the group.
"As people of South Sudan, we're in solidarity with all themarginalised groups in the world, and the marginalised groups inSudan. It's solidarity. It's solidarity. It takes all itsforms," he said.
The SPLM-North is part of an alliance with rebels from thewestern region of Darfur, which want to topple Sudan PresidentOmar Hassan al-Bashir.
Amum said Juba preferred that the SPLM-North talk directlyto Sudan but wants a "just solution" for them. The rebel groupis composed mainly of people who sided with the South duringcivil war and were left in the north after the southernsecession.
Amum said a comprehensive deal with Sudan would also callfor a referendum for the disputed border region of Abyei and theright of return of the Dinka tribe, which is allied to Juba.
More than 100,000 people, mostly Dinka, fled when Sudanseized Abyei in May 2011 after an attack on a Sudanese armyconvoy that the United Nations blamed on the southern army. (Writing by Ulf Laessing, editing by Jane Baird)
