REFILE-Sudan sells disputed oil from S.Sudan after talks fail

Mon Feb 4, 2013 2:10pm GMT

(Refiles to restore dropped letter in "disputed" in headline)

* Crude sold from storage in Sudan to UAE firm

* Ownership disputed between Sudan and South Sudan

* Sale of disputed oil sparked row last year

By Emma Farge and Ulf Laessing

GENEVA/KHARTOUM, Feb 4 (Reuters) - Sudan has sold a cargo of oil of disputed ownership from South Sudan oilfields, a minister and trading sources said, in what is likely to be seen by the south as a provocation after security and oil transport talks between the two countries fell apart.

Sudan's President Omar Hassan al-Bashir and South Sudan's Salva Kiir failed at talks in Ethiopia last month to end a stalemate over withdrawing armies from a border region - a pre-requisite for resuming oil exports.

Landlocked South Sudan shut oil output a year ago in a dispute over how much the new nation should pay in pipeline fees to Sudan to transport crude via its northern neighbour for export from Port Sudan on the Mediterranean.

Industry sources said that after a second round of failed talks, Sudan last week signed a contract with a company in the UAE with links to Khartoum to export the oil from storage tanks in Sudan.

"Yes, that contract has been settled," Sudan's Foreign Minister Ali Ahmed Karti told Reuters during a visit to Germany last week, confirming initial reports from traders.

The deal is to export up to 1 million barrels of South Sudanese Dar Blend on a free-on-board basis, although the cargo has not yet been shipped, the industry sources said.

South Sudan immediately claimed ownership of the oil.

"That money is supposed to be the money of South Sudan. That oil was stored since the crisis. If it is to be sold it must be with the knowledge of both the minister of petroleum of South Sudan and the petroleum minister of Sudan," Information Minister Barnaba Marial Benjamin said.

"The oil in storage, maybe Sudan will get something out of it, a share of it, but that money has to come back to the Republic of South Sudan," Benjamin said.

DISPUTED OIL

Industry sources and diplomats said exact ownership of the oil was unclear but that it was most likely part of southern oil seized by Sudan when tensions over pipeline fees escalated last year.

Sudan has confiscated more than 6 million barrels of southern crude since December 2011, according to figures provided by South Sudan's negotiating team at talks in Addis Ababa. Sudanese officials have not publicly confirmed or denied this amount.

Last year, Swiss commodity trader Trafigura bought a tanker of crude which was later seized as part of a legal dispute between the two countries.

South Sudan's secession from Sudan in 2011 left the northern neighbour with only a quarter of the combined countries' oil output.

The loss of oil exports in the dispute over pipeline fees has left both economies in turmoil. Oil is the main source of state income for food imports. (Additional reporting Hereward Holland, Alexandra Hudson; Editing by Richard Mably)

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