China eyes oil cooperation with new state of South Sudan

BEIJING, July 11 Mon Jul 11, 2011 11:02am BST

BEIJING, July 11 (Reuters) - China is keen to work with the new state of South Sudan in developing its oil industry, but may have to adjust its investment plans following the south's split with Sudan, Chinese state media said on Monday.

South Sudan produces about three quarters of the whole of Sudan's roughly 500,000 barrels of oil output and depends on oil for 98 percent of its revenue.

The south funnels its oil through northern pipelines to Sudan's only commercial port on the Red Sea coast.

South Sudan is involved in tortured negotiations over oil rights with its old civil war foe which has received half of the revenues from southern oil for six years and which wants pipeline fees after secession.

China relied on Sudan as its sixth largest source of oil imports in 2010, and has been keen to build a relationship with leaders in the south, which became the world's newest country over the weekend.

Li Zhiguo, charge d'affaires of the Chinese Embassy in South Sudan, said China could leverage its experience in working in the oil industry in Sudan to help the new nation, the official Xinhua news agency said.

"Compared with other countries, China's advantage in energy cooperation is its investment based on equality and mutual benefit," Li was quoted as saying. "We'd like to carry forward (that) advantage in future cooperation with South Sudan."

Li said that arguments between South Sudan and Sudan on oil revenues were an internal affair to be decided by "the two brothers of Sudan".

"Any intervention in this key sector from the outside would only complicate the situation and would not help resolve the issue," Li said.

"We will respect the decision by the two sides and adjust our plans of cooperation accordingly," he added, without elaborating.

China has already begun training 30 South Sudanese in skills needed for the oil industry, Xinhua said.

China recognised South Sudan on Saturday, and President Hu Jintao has promised strong ties with the new country. (Reporting by Ben Blanchard;Editing by Clarence Fernandez)