South Sudan downplays Al-Bashir's warning

South Sudan has downplayed Sudan President Omar Hassan Al-Bashir's warning to shut-down oil pipelines if the newly succeeded country refuses to pay transit fees. Almost three-quarters of the country's oil, equivalent to about 500,000 b/d, come from the south, but most of the infrastructure and production facilities are based in the north.

Oil is the biggest revenue stream for both sides, currently divvied up at a 50-50 share. The oil sharing agreement expires on 9th July when South Sudan declares independence. Speaking about al-Bashir's statement the South's Information Minister Barnaba Marial Benjamin, said: "We completely regret and are surprised by the decision of the president of the Republic of Sudan that he can close off the pipes that carry the oil from southern Sudan…This is also the oil that also supports 70 per cent of the economy in the north. So we are obliged by the mutual cooperation that we need that oil to flow, so that Sudan can benefit, and the people in south Sudan, who are the owners, also benefit."

Back in January, the South Sudanese voted overwhelmingly in favour of separating from the north. The referendum on independence was part of the 2005 Comprehensive Peace Agreement (CPA), which ended a two decade-long civil war between the two sides.

South Sudan has subsequently accused Sudan of planning to overthrow the South's government. In March, a senior official with the South's ruling party, Pagan Amum, said that Khartoum is arming rebel groups in preparation to destabilise South Sudan and annihilate the region's leaders before secession in July.

The situation was further complicated when Sudan seized the town of Abyei in May. It said that its army acted after 22 northernes were killed in a southern ambush, and took little heed of UN's calls to withdraw its troops from the region immediately. The dispute was later resolved, when the two sides signed an agreement pledging to end fighting.

Abyei was granted a special status under the CPA, which stipulates that both sides have to keep their troops out until a referendum to determine Abyei's future. This, remains one of the key issues yet to be resolved.

Sources: Reuters, Bloomberg, Khaleej Times

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