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China warns of risks without deal on Sudanese oil

By Mohamed Osman
Associated Press / December 10, 2011
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KHARTOUM, Sudan—China's special envoy to Africa warned of serious consequences Saturday if Sudan and South Sudan cannot resolve their disputes over oil and the demarcation of their border.

China is a major buyer of and investor in Sudanese oil, most of which is located in South Sudan, which declared independence in July. A 2005 peace treaty ended nearly five decades of war between the mostly Arab north and mostly black south.

The economic future of the two countries remains intertwined: While most of the oil is in the south, it must be pumped through two pipelines that run through the north. At the center of the dispute are the transit fees South Sudan must pay to use the pipelines.

If the two sides fail to resolve the problem, the "whole region would be affected, the repercussions would be very serious," said the Chinese diplomat, Liu Guijin.

Beijing sent the envoy to try to break the deadlock between two rivals who often appear on the brink of renewed conflict.

China owns a stake in the two pipelines running through Sudan and has dozens of workers in the region's oil fields.

Guijin held talks earlier in the week with officials in South Sudan. On Saturday, he met with Sudan's vice president, Ali Osman Taha, in Khartoum.

"If the situation continues to be worse, the consequences would be lose lose for all," he said.

Khartoum lost nearly 75 percent of the roughly 500,000 barrels a day produced by the two countries when the south seceded.

South Sudan said in a statement last week that it offered to pay an average of 70 U.S. cents for each barrel sent through the pipelines through the north. Sudan, the south said, was demanding $36 a barrel.

Also at issue is more than $700 million in transit fees that Sudan says the south has not paid since independence, a figure South Sudan disputes. Sudan recently announced it would take a percentage of South Sudan's oil shipped through the north as payment for use of the pipelines.

Southern officials have denounced what they call "intimidation" and threatened to stop sending oil to Sudan if the south's oil is not allowed to leave the northern port.

Guijin urged both sides to compromise and make "short-term sacrifices for long-term interests."

Sudan and the south have several issues to resolve besides oil, including demarcation of the border and ownership of the disputed region of Abyei. Sudan has also carried out military attacks in southern territory in recent weeks.

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