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South Sudan Oil Still not Flowing

People pass by the Ministry of Petroleum and Mining in Juba, November 7, 2012.
People pass by the Ministry of Petroleum and Mining in Juba, November 7, 2012.
South Sudan is blaming Sudan for preventing it from restarting oil production, which was halted ten months ago in a dispute between the former civil war foes that nearly took them back to all-out war.

A September deal was supposed to see the southern oil start flowing north again, saving both economies which are in dire straits. But as South Sudan President Salva Kiir told crowds, the lifeline to both economies is still dangling.

Supporters of South Sudan President Salva Kiir at a rally in Melut County, Upper Nile state, November 20, 2012. (H. McNeish/VOA)
Supporters of South Sudan President Salva Kiir at a rally in Melut County, Upper Nile state, November 20, 2012. (H. McNeish/VOA)
Crowds of people danced, sung and beat drums Tuesday at a rally to welcome South Sudan President Salva Kiir on his first visit to oil-producing Melut County, in Upper Nile state.

Kiir had hoped his visit to this border region would mark the resumption of oil production after a ten-month shutdown that has left South Sudan’s fledgling economy in ruins.

Sudan and South Sudan signed a deal in September to resolve a dispute over fees the South pays Khartoum to export its crude through pipelines, refineries, and a port in the north.

But Kiir said that Khartoum had now demanded that South Sudan first help resolve conflicts across the border in Blue Nile and in the Nuba Mountains.

"We were supposed to restart oil production on November 15, five days ago," he said. But he added "Suddenly Khartoum people changed their minds, saying that we must denounce the Nuba Mountains and Blue Nile first."

New tensions

Rebels in South Kordofan - home to the ethnic Nuba people - and Blue Nile fought alongside the South during a decades-long struggle against Khartoum.

But as South Sudan seceded in July, 2011, a new war erupted in the two states between rebels and Sudan's government, after promises that rebels would be integrated into the army and for popular consultations fell apart.

Khartoum has long accused South Sudan of supporting the insurgency - a charge the South has vehemently denied. But analysts say it is part of a “proxy war” to counter Sudan’s support of militias in Southern territory.

Kiir again denied that South Sudan had a role to play in stopping the conflict, instead asserting that Sudan was hiding behind this rationale in what appears to be another example of brinkmanship between the two countries.

He says the Nuba Mountains and Blue Nile are only fighting in the north in their territory and Khartoum is looking for an excuse not to restart the oil.

US urges implementation of deals

Meanwhile, the United States on Thursday urged the two sides to implement deals made in September on demilitarizing a largely undefined and oil-rich border and resuming production.

State Department spokesperson Victoria Nuland urged the two sides - both of which have experienced rampant inflation, plummeting currencies and shortages of key goods - to resume production soon to ease the pressure on the ailing economies.

Upper Nile potential

Back at the rally, the only cause for celebration was President Kiir’s announcement that his trip was not entirely wasted.

He says he came to Upper Nile state for two reasons: First is to lay the foundation stone for and oil refinery and the second was to connect Upper Nile with old friend Ethiopia.

South Sudan hopes that a refinery in Upper Nile state could produce 10,000 barrels daily for domestic consumption. Another refinery in its second oil-producing Unity state also aims at easing reliance on oil imports.

Meanwhile, an improved road to Ethiopia from Upper Nile’s oil fields has been discussed by ministers as a way to circumvent the pipeline through Sudan, by trucking oil all the way to the Red Sea port in Djibouti until a pipeline can be built on the same route or to Kenya’s new port in Lamu.

Kiir met with Kenya’s deputy prime minister last week to discuss the pipeline, which would cost billions and take years to build.

But until then, concerns over a continued shutdown remain high for two weakened Sudans.