North Sudan has released a 600,000 barrel oil shipment of landlocked South Sudan held over failed customs duties, a southern official said as both sides argue over dividing oil revenues. Khartoum said it had stopped the crude cargo at the outlet of Port Sudan because South Sudan failed to pay customs duties, the latest in oil tensions between the two countries. South Sudan took most of the country's oil production of 500,000 barrels of oil when it became independent on July 9 as part of a 2005 peace deal that ended decades of civil war with the north. Oil is the lifeline of both economies. The South needs northern refineries, the only Red Sea port in Port Sudan and pipeline to sell the oil but both sides have failed so far to agree on usage fees in a row that could disrupt supplies from one of Africa's largest producers.
"Now the shipment has left, the 600,000 barrels," David Loro Gubek, undersecretary at the southern ministry of energy and mining in Juba, told Reuters. He confirmed that Khartoum had demanded a fee for future use of northern oil facilities of around $32 a barrel which would amount to a third of the export value of South Sudan, according to Reuters calculations based on current prices. Until now both split equally the oil. South Sudan had asked the African Union (AU), which is sponsoring bilateral talks in Ethiopia, to find a compromise after rejecting the $32 proposal, Gubek said. "So, the African Union has not decided what is the correct amount to pay. Now I think our president talked to (northern president) Omar (Hassan) Al-Bashir so that whatever decision the AU gives, then the Republic of South Sudan will pay."
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 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 crud, but a dispute between various officials has threatened to derail the agreement.