Sudan and South Sudan have hammered out a deal over oil, resolving a key part of a bitter dispute that brought the rivals to the brink of all-out war earlier this year. "The parties have agreed on all of the financial arrangements regarding oil," said African Union mediator Thabo Mbeki, two days after a United Nations deadline for the neighbours to resolve arguments over oil and borders expired.
Landlocked South Sudan said it had agreed to pay a pipeline transit fee of $9.48 per oil barrel to transport its crude through Sudan, a significant drop from Khartoum''s initial demands of up to $36 a barrel in fees. In addition, Juba agreed to make a "one-off payment" to Khartoum of some $3 billion to cover the massive financial gap created by the South''s independence last year, a fractious divorce that left a raft of issues unresolved.
"This is a good deal.... South Sudan will finally be able to focus its attention and dedicate its full resources to establish our state," Juba said in a statement. Mutrif Siddiq, a Sudanese delegate to the talks in the Ethiopian capital, said the deal was "reasonable", although it did not meet the expectations of either side. US Secretary of State Hillary Clinton, who travelled to South Sudan''s capital to meet President Salva Kiir on Friday - just hours before the deal was struck - praised the agreement between the former civil war foes.
"I welcome the agreement... (it) reflects leadership and a new spirit of compromise by both sides," she told reporters in the Kenyan capital Nairobi, the latest leg of her Africa tour. "The future of South Sudan is now brighter.... for Sudan too, this agreement offers a way out of the extreme economic stress it is now experiencing," she added.
The AU has been mediating year-long talks to try to resolve disputes that flared after South Sudan''s independence in July 2011, the final stage of a 2005 peace deal to end one of Africa''s longest civil wars. Mbeki said both sides would meet next month to try to find a deal on the disputed border region of Abyei - one of the most sensitive issues remaining - with a new AU deadline set of September 22 to resolve outstanding issues.
Sudanese President Omar al-Bashir is expected to meet with Kiir next month, he added. "We have reached a final agreement with South Sudan on oil transit, and we expect to settle other files under negotiation," Sudan''s under-secretary at the petroleum ministry, Awad Abdul Fatah, told the official SUNA news agency.
A timetable will be drawn up for the resumption of oil production and exports, which are key to the economies of both deeply impoverished countries. However, analysts suggest it could take up to six months for South Sudan to be able to resume full oil production. Oil generates about 98 percent of South Sudan''s government revenue. South Sudan took with it three-quarters of the oil held by the previously united nation, but the processing and shipping facilities remained in Sudan. The two sides could not agree on how much Juba should pay to export its crude through northern pipelines and ports, leading the South to shut down production in January after Khartoum began seizing the oil in lieu of payment. The deal struck lasts for three and a half years, Juba said, after which it hopes to have completed proposed export pipelines to Kenya or Djibouti.
Despite the deal, Juba''s chief negotiator Pagan Amum accused Khartoum of violating a peace plan drawn up by the AU in April, notably by bombing South Sudan, which he said laid it open to sanctions. Contentious issues remain. Sudan accuses South Sudan of supporting insurgents on its territory, a charge analysts believe despite denials by Juba, which in turn accuses Khartoum of backing rebels on its territory.
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