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First South Sudan oil reaches Sudan

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(Globalpost/GlobalPost)

Sudan's oil ministry said Sunday that the first crude from South Sudan reached its territory, bringing both impoverished nations closer to billions of dollars in revenue after a dispute over fees.

"The first batch of oil already arrived on Sudanese land yesterday," Sudan's undersecretary at the petroleum ministry, Awad Abdul Fatah, told AFP. "It's a small testing quantity."

Eight days ago South Sudan held a ceremony to restart oil production at the Thar Jath field in Unity state after a shutdown of more than a year.

"We're really in a hurry to do things quickly, both of us," Fatah said. "We'd like for the money to start flowing to the treasuries as soon as possible."

The South halted crude production in early 2012, cutting off most of its revenue after accusing Khartoum of theft in a row over export fees.

China was the biggest buyer of the oil.

Fatah said the oil flowed into a tank on Sudanese territory from South Sudan's Block 5A, southeast of the Unity state capital Bentiu.

"They have already processed this oil and they have pushed this through to the export tank" on the Sudanese side, Fatah said.

He expressed hope that within a week oil could begin moving into the main pipeline to begin a journey of about 45 days to the export terminal at Port Sudan on the Red Sea.

"This operation will start small because they cannot open all thousands of wells at the same time," Fatah said.

"They have started already opening the wells."

He anticipates an initial flow of 10,000 barrels per day moving towards Port Sudan, where stock will have to build until there is enough to fill a tanker which can hold more than 600,000 barrels.

Production from South Sudan's Upper Nile state, where most of the fields are located, should reach Sudan in two or three weeks, Fatah said.

The first ship carrying oil could leave sometime in July, with the first revenue arriving up to 40 days later, he added.

Fatah said engineers are still checking the condition of the Sudanese pipeline, which runs for about 1,500 kilometres (930 miles). So far there appears to be no major problems.

Workers on the South Sudanese side found a bullet hole in the local pipeline on Saturday but the leak has been stopped, he said.

South Sudan split from Sudan in July 2011, following an overwhelming referendum vote for independence under a peace deal that ended a 22-year civil war.

The new country separated with roughly 75 percent of the 470,000 barrels per day of crude produced by the formerly unified country, while refineries and export pipelines stayed under Khartoum's jurisdiction.

Independence left key issues unresolved, including how much the South should pay for shipping its oil through Sudan's export infrastructure.

Rising tensions led to border clashes and a 10-day South Sudanese occupation of the north's main Heglig oil field last year.

At talks in Addis Ababa last month, Sudan and South Sudan finally settled on detailed timetables to resume the oil flows and implement eight other key pacts to normalise relations.

The deals had remained dormant after signing in September as Khartoum pushed for guarantees that South Sudan would no longer back rebels fighting in South Kordofan and Blue Nile states.

Independence of the South left Khartoum without most of its export earnings and half of its fiscal revenues.

As a result, the pound currency plunged in value on the black market while inflation rose to more than 40 percent, where it remains.

Loss of the export fees from South Sudan's oil added to the north's economic burden but, for the South's government in Juba, shutting oil production meant the loss of 98 percent of its stated revenue.

It is now set to earn billions of dollars from exporting its oil again, while the deal is worth $1 billion-$1.5 billion annually in transit fees and other payments to Sudan, an international economist has estimated.

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http://www.globalpost.com/dispatch/news/afp/130414/first-south-sudan-oil-reaches-sudan-2