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South Sudan renegotiating oil deal with Sudan: official

October 8, 2019 (JUBA) - South Sudan is renegotiating an oil deal with Khartoum as it will not meet the deadline to finish paying the $3 billion agreed as compensation for its secession from Sudan in 2011.

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A pipeline that transports crude oil from the south to Port Sudan (Reuters)

The Petroleum minister, Awou Daniel Chuang said Monday that the young nation had so far paid $2.4 billion as compensation to Sudan, but would not manage the remaining $600 million by December.

"As the contract expires, we should be able to extend because we cannot run operations in a vacuum. This agreement is what governs the fees that we pay to Sudan," he told reporters in the capital, Juba.

South Sudan got the lion’s share of the oil when it split from neighbouring Sudan, but it’s only export route is through Sudan, giving Khartoum leverage and leading to ongoing pricing disputes.

In 2012, however, South Sudan agreed to pay Khartoum $3 billion as compensation for oil reserves lost after Juba’s break away in 2011.

Chuang said talks on extending the deadline would start by end of October and that team from Juba was already in Khartoum working on the issue.

He disclosed that money was paid back by deducting $15 from each barrel of South Sudan’s oil processed in Sudan’s refineries.

South Sudan, where oil revenues make up nearly 98 percent of the budget, has been reeling an under economic crisis due to civil war.

South Sudan became the world’s youngest country after it split from Sudan in 2011.

But production was affected when civil war broke out two years after independence. A September peace deal is largely holding, but a plan to form a unity government in May was pushed to November 12.

South Sudan, official figures show, presently produces 135,000 barrels of crude oil per day.