Sudan Oil Deal in Jeopardy as Tension Builds Between Both Countries

KAMPALA, Uganda—The recently agreed deal between oil-producing South Sudan and Sudan, which was expected to allow the resumption of vital oil shipments through Sudanese pipelines and ports, is under threat due to lingering tensions along the two nations’ common border, officials said Sunday.

Mutrif Siddiq, spokesman for the Sudanese negotiating team in Ethiopia, said that despite reaching the African Union-mediated deal on oil-transit fees, “no agreement will be signed” until a deal is agreed on the restoration of security in Sudan’s three restive border states, where Sudanese forces are battling multiple rebel groups, allegedly backed by the South.

“Any agreement on oil shall be subject to the implementation of a full and final agreement on security matters,” Mr. Siddiq said.

The Sudanese stance watered down South Sudan’s prospects of resuming its 350,000 barrels-a-day oil output, halted in January when the transit-fees feud flared up, threatening the economies of two oil-producing nations.

“We are still talking but our desire is to resume oil output as soon as possible,” said Barnaba Benjamin, South Sudan’s information minister.

The two formerly united nations are yet to decide the precise position of their 1,120-mile, oil-rich common border following a messy separation in July last year, which saw South Sudan break away with as much as 75% of Sudanese oil fields.

Talks over border security are continuing, but a final deal isn’t envisaged until Ramadan ends at the end of August, Sudanese officials say.

Prospects of a quick breakthrough remain murky after Sudan rejected an AU-proposed map last week to set up a demilitarized zone along the border to ease tensions between the two countries, which edged closer to an all-out war in April, after weeks of cross-border skirmishes.

South Sudan has to urgently restart output in order to bolster its foreign-exchange reserves, which have nearly been depleted after months of the border feud. The United Nations Security Council had given the two states until Aug. 2 to resolve all outstanding disputes or face sanctions.

The Security Council is now expected to hold a meeting Aug. 9 to discuss the progress made in the process and to decide the way forward.

Read more at The Wall Street Journal

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