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Sudan Oil Talks Fail; Pipeline Shutdown Looms

Pagan Amum, South Sudan's top negotiator in the oil dispute talks with Khartoum, speaks during a news conference in Ethiopia's capital, Addis Ababa, January 27, 2012.

Pagan Amum, South Sudan's top negotiator in the oil dispute talks with Khartoum, speaks during a news conference in Ethiopia's capital, Addis Ababa, January 27, 2012.

Sudan and South Sudan have failed to resolve a dispute over oil revenues, less than 24 hours before the south is due to halt crude production and close its pipeline to the sea. Failure to settle the dispute could have grave implications for the economies of both countries.

North-South Sudanese talks on sharing oil revenues started well Friday, when Sudanese President Omar al-Bashir and South Sudanese President Salva Kir met on the sidelines of a regional summit.

Hopes of a deal were raised during the day when the host of the talks, Ethiopian Prime Minister Meles Zenawi, told East African leaders an announcement was expected shortly.

"We had informal discussions this morning to deal with the current crisis between the republic of Southern Sudan and the Republic of Sudan," he said. "I believe we will have an announcement to make on this matter at the end of our meeting."

But when the meeting broke up, Mr. Meles told reporters the hoped-for deal had fallen through.

"I think there's quite a lot of progress, but not enough for us to be able to clinch a deal now," he said.

Sources close to the talks say announcement of the deal was being made to regional leaders when South Sudan's President Salva Kir abruptly stood up and said his side had not accepted the terms.

The south's chief negotiator at the talks, Pagan Amoum, later told reporters a deal had never been close. Amoum said the south remains adamant that the Khartoum government must make restitution for oil it has confiscated during their protracted dispute.

"These talks could not go anywhere because Khartoum is insisting to continue stealing ... and are determined that they will not rob and steal any oil that will go through the pipeline, that is why we are forced not to send any oil through their pipeline," Amoum said.

In an opinion piece in The New York Times this week, the adviser to the African Union mediation panel, Alex de Waal, said a pipeline shutdown would be “suicidal." He says it would cut off 97 percent of the south's income. It would mean a loss of $650 million a month in revenue.

Chief southern negotiator Amoum said the decision to close down the pipeline had been hard. But he rejected a reporter's suggestion that it might be better to keep the pipeline, and the oil revenue temporarily flowing while the dispute is settled.

"For you to suggest that we continue to lose for one month and pump the oil to be stolen, it's very strange. You want the south to lose more? That is what is being suggested," he said. "That is why we say, please stop this behavior and we are ready to resume. So you are right. South Sudan is losing and stand to lose? It is because the government of Sudan is stealing and robbing the resources. That is why we are losing."

Amoum said the shutdown is well under way and would be complete by Saturday. He said it would take a week to resume full production after an agreement is reached.

Oil is considered the foundation of the economies of both north and south Sudan. The south took more than 70 percent of their oil resources when it broke away from Khartoum last July. But the oil can only be exported through the north. A planned alternative pipeline to the south through Kenya is still years away.