Sudan halts southern oil shipment

KHARTOUM/JUBA Fri Aug 5, 2011 9:11pm BST

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KHARTOUM/JUBA (Reuters) - North Sudan has halted an oil shipment from landlocked South Sudan in a dispute over customs fees, it said on Friday, signalling a rise in tensions that could disrupt supplies from one of Africa's largest producers.

For use of its oil facilities, North Sudan has demanded fees worth a third of the export value of South Sudan, which became independent last month, after a referendum in January agreed under a 2005 peace deal that ended decades of civil war.

The halting of a 600,000 barrels crude cargo in Port Sudan signals mounting tensions over how to share oil revenues.

The South took 75 percent of the country's 500,000 barrels a day of oil production, Africa's fifth largest. But it depends on the North to use the only cross-border pipeline to the Red Sea outlet of Port Sudan to sell the oil.

On Friday, customs authorities in Port Sudan stopped one shipment because duties had not been paid, a spokesman for the foreign ministry in Khartoum said without giving other details.

"Customs asked for the fees to be paid. They paid last time but not this time," the spokesman said.

He said the action had been the decision of the customs authorities and was not related to current talks between North and South about sharing oil revenues.

The two sides have failed so far to reach an agreement on a transit fee to be paid by the South. Until now both split equally the oil, the lifeline of both economies.

Khartoum is asking for $32 a barrel to use its port, the pipeline and refineries to sell the southern oil, the spokesman said. This is worth roughly a third of South Sudan's export value at current prices. according to Reuters calculations.

"This has to be negotiated. There is no agreement yet," he said, adding that other proposals such as a fixed sum instead of a transit fee were being discussed.

A South Sudan official sought to ease the oil tensions.

"We don't interpret this as a rejection by Khartoum. I do not think this is politically motivated," said David Loro Gubek, undersecretary at the ministry of energy and mining in Juba.

"There are certain procedures at the port that have to be followed. We will wait for clarification tomorrow."

Tensions had seemed to have eased at the end of last month when South Sudan said it saw progress in oil sharing talks with the North only a week after accusing it of waging economic war by demanding a very high pipeline transit fee.

Last month, the northern parliament approved an alternative 2011 budget that lawmakers said included an annual income of $2.6 billion for transit fees -- the same amount expected for the loss of southern oil production.

Refineries are located only in the North. Experts say southern plans to connect to a pipeline in east African neighbour Kenya are years away.

Analysts say Sudan has had little transparency for years about how oil revenues are booked. The country has endured conflict, inflation, corruption and U.S. trade sanctions.

Apart from sharing oil revenues, both sides need to end violence in some parts of their shared border and need to divide up other assets and debt.

Some 2 million people died in Sudan in a decades-long conflict over religion, ethnicity, ideology and oil, although the secession last month was very peaceful.

Sudanese oil flows mainly to Asia, with China buying more than a half of total volumes. South Sudan's production is dominated by Chinese and Indian companies, which have been marketing their crude themselves so far.

Last month, South Sudan also signed a deal with trading house Glencore to help it market crude but a dispute between various officials has threatened to derail the agreement.

(Writing by Dmitry Zhdannikov; Editing by Anthony Barker and David Gregorio)

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