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Hillary Clinton credited for pushing Sudan, South Sudan oil fee dispute resolution



This news story was published on August 5, 2012.
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By Alan Boswell, McClatchy Newspapers –

NAIROBI, Kenya — Bitter African foes Sudan and South Sudan reported Saturday that they had struck a deal that would let South Sudan re-start oil production and ship it through Sudan for a fee, but while U.S. officials hailed the accord, it remained unclear when, or even if, oil will start flowing.

State Department officials credited Secretary of State Hillary Clinton with a “great success” for bringing the two sides together. Clinton met with South Sudanese President Salva Kiir on Friday in that country’s capital, Juba, on Friday. “It should be seen as her achievement. It should be seen as a major diplomatic success,” said a senior State Department official who was authorized to speak only on condition of anonymity.

But the word from Khartoum, Sudan’s capital, was less enthusiastic. “The agreement does not fulfill the ambitions of both sides,” spokesman for the Sudanese delegation Mutrif Siddig told Sudan’s state news agency, SUNA, according to the Reuters news agency. “Its implementation will start after understandings on security issues.”

Those security issues, which include discussions of both countries’ support for rebel movements operating inside the other, may be far thornier to resolve.

In remarks Saturday in Nairobi, Clinton praised both South Sudan and Sudan. “The future of South Sudan is now brighter,” she said. Sudan too “deserves credit for taking this step,” she said.

Diplomatic efforts to bring the two sides together had stalled in the year since South Sudan was declared independent from Sudan after decades of civil war. On Friday, it took both African and American diplomats to arrange the oil deal.

Former South African President Thabo Mbeki, the African Union mediator in the talks in Ethiopia, met throughout the day Friday with negotiators for both sides, but an agreement did not appear insight until Mbeki called Kiir Friday evening to seek his approval for the deal. The AU talks then resumed at 9:30 p.m. and ran until 2 a.m. Saturday.

Clinton later told reporters that she had urged Kiir to compromise during their meeting Friday in Juba “because a percentage of something is better than a percentage of nothing.”

Under the deal, South Sudan will pay Sudan an average of about $9.50 a barrel to export oil north through Sudan. The amount is far less than Sudan’s initial demand of $36 a barrel, and about $2 a barrel more than South Sudan had offered most recently.

In addition, South Sudan will transfer $3 billion to Sudan as a financial grant over the next three and a half years to help compensate for Sudan’s loss of oil revenue when South Sudan seceded.

The two countries agreed that the transport fees will be passed to companies buying South Sudan’s oil.

South Sudan, which found itself in possession of most of Sudan’s oil fields after independence, shut down all production in January after talks with Sudan deadlocked over the price for moving the oil through Sudan and Sudan announced it would begin confiscating what it believed was its fair share of the oil. South Sudan has no port facilities and must move its oil through a pipeline to Sudan’s Port Sudan for export.

With no oil income, South Sudan was within weeks of running out of money — U.S. calculations said that moment would arrive between August and October — and U.S. officials said the accord came just in time to avert disaster.

According to the senior State Department official, Clinton did not threaten punitive U.S. action if Kiir did not resolve the impasse. Instead, she tried to impress on the South Sudanese leader the severity of the crisis his new nation faced if the oil didn’t begin flowing again soon.

How soon oil production will resume was unclear.

A statement from the African Union on Saturday suggested that celebration is premature. While congratulating the two nations for agreeing on “financial matters” related to oil exports, it urged them to agree on all “remaining aspects of oil-related issues, in order for production and transportation to resume as soon as possible.”

The two sides fought a bitter battle in April when South Sudan seized a disputed oil field that Sudan has long claimed at Heglig, then destroyed 50 percent of its production capacity as it withdrew its troops, according to State Department officials. In addition, both sides support rebel groups inside the other.

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