NAIROBI — South Sudan is offering to pay Sudan higher transit fees for the use of northern oil pipelines in an effort to resolve an ongoing dispute that has hurt both countries economically.
According to a set of proposals South Sudanese negotiators submitted to African Union mediators in Addis Ababa, Juba is offering Khartoum $7.26 per barrel to ship oil through an eastern pipeline to Port Sudan, and to pay $9.10 for the use of a pipeline that runs further west.
The offer marks a significant potential compromise for both sides. South Sudan had previously demanded transit fees closer to $1 per barrel, while Sudan had demanded upwards of $36.
South Sudan shut down all oil production in January after accusing Sudan of stealing southern oil from pipelines and Port Sudan. Sudan said it confiscated the oil to make up for unpaid fees.
Dr. Francis Nazario, the charge d’affairs at South Sudan’s mission to the United Nations, said South Sudan is waiting for Khartoum's response before reopening the wells.
"South Sudan is offering immediately to resume production of oil and export if Sudan accepts the transit fee," said Nazario.
A U.N. Security Council resolution has ordered Sudan and South Sudan to reach agreement by August 2 on the issues left unresolved from the South's separation last year.
South Sudan's proposal calls for the establishment of several joint border teams that will work together to resolve the final demarcation of the border.
It also recommends holding a referendum in the Abyei region by November to let the people decide which country the oil-producing region will belong to.
Nazario says there could be consequences if Sudan does not accept the proposal.
"If Sudan says no to this proposal, I think we'll reach the [August 2] without any agreement to solve the outstanding issues and then the Security Council will definitely come up with another measure which will be imposed on both states."
Negotiators from the two sides have been meeting again in Ethiopia over the past few weeks, but tensions remain high.
South Sudan last week issued a complaint to the AU mediating panel, accusing the Sudanese air force of bombing southern territory. Sudan said it was pursuing Darfur rebels north of the border.