News Analysis: Could oil deal between Sudan, S. Sudan endure amid standing barriers?

KHARTOUM, Aug. 4 (Xinhua) -- The oil deal reached between Sudan and South Sudan has constituted an important breakthrough in the two countries' negotiations over outstanding issues in Addis Ababa, Ethiopia, but observers wonder whether the deal would endure under other differences, top of them the security file.

The African Union mediator Thabo Mbeki on Friday announced that Sudan and South Sudan have reached an agreement on sharing their oil resources, which allows the resumption of southern oil to export through Sudan's territories.

Though Mbeki did not give further details, local Sudanese media on Saturday reported that the two sides have agreed on 25.8 U.S. dollars for a barrel as fees for exporting and processing South Sudan's oil through Sudan's oil infrastructures.

"It's better to reach settlements for all the outstanding issues as they are very associated to one another," Dr. Mohamed Al- Nayer, a Sudanese economic expert, told Xinhua.

"It is known that South Sudan's oil is produced at areas bordering north Sudan and therefore the lack of security on the borderline would affect the oil industry and its flow through Sudan's territories. This necessitates the importance of resolving the border security issue," he noted.

However, Dr. Ishaq Bashir Jamma, former Sudan's State Minister for Oil, believed that the resolution of the oil issue would be the key to the settlement of the other issues.

"It is not true that the security issues should precede the economic one. This deal will produce positive results regarding the other outstanding issues," Jamma told Xinhua.

"The security will be a common concern of both Sudan and South Sudan, at least with regard to the oil passages," he added.

In Oct. 2011, Sudan demanded 36 U.S. dollars per barrel as a transit fee to export South Sudan's oil through Sudan's territories.

However, Dr. Al-Nayer believed that the fee which the two sides have just reached agreement, namely the 25.8 dollars per barrel is reasonable and fair for both sides.

"It is obvious that both sides have given compromises as Sudan retreated from its previous demand of 36 dollars per barrel, while South Sudan agreed on the declared sum instead of the price provided by its negotiating team," he said.

The oil dispute between Sudan and South Sudan broke out five months after separation of the south in July 2011.

On Jan. 20, 2012, South Sudan announced halting of its oil production and exportation through Sudan's territories, accusing Khartoum of stealing what worth about 1.4 million barrel of the south's oil at Bashair harbor in eastern Sudan.

The economic expert, Al-Nayer, believed that the economic conditions were the main reasons which pushed Sudan and South Sudan to find a settlement for the oil file.

"As for the south, it is requested to ensure funding resources, " he explained.

"Khartoum, in turn, is facing an economic crisis and it is unwilling to gain further burden, taking into account the continuing decrease in its hard currency and the rise in the inflation rate. Therefore, the two sides had no choice but to reach this deal," he added.

While most of the oil wells are in the south, the pipelines and port to export the oil are in the north.

In addition to the oil file, there are many outstanding issues between Sudan and South Sudan, including the border demarcation and trading accusation by the two countries of supporting the rebels on its territories. Enditem