South Sudan VP in Khartoum with oil revenue at stake

South Sudanese Vice President Riek Machar met Sudan's President Omar al-Bashir on Sunday, seeking to ease tensions after Khartoum threatened to halt oil flows worth billions of dollars to both impoverished neighbours.

Machar met Bashir for about 30 minutes after earlier discussions with Sudan's Vice-President Ali Osman Taha at a conference centre along the Blue Nile River.

The oil, defence and interior ministers from both countries were also present, an AFP reporter said.

"Sudan is optimistic about the visit," the official SUNA news agency quoted Information Minister Ahmed Bilal Osman as saying.

The meeting "aims to reach (a) solution for the problems impeding progress of the relations between Sudan and South Sudan," he indicated, according to SUNA.

Shipments from Sudan of South Sudanese oil resumed about nine days ago after the resolution of a year-long fee dispute, and despite uncertainty after Bashir ordered the oil flow stopped.

The landlocked South voted to split from Sudan two years ago, under a peace deal which ended a 22-year civil war.

South Sudan left with most of the formerly united country's 470,000 barrels per day of oil production, but pipelines and the Red Sea export terminal remained in Sudan.

The Juba government halted its crude production early last year in a dispute over how much it should pay Khartoum to use the export infrastructure.

A March deal finally saw Juba resume pumping oil which flowed slowly towards Port Sudan where stocks built up for export.

But on June 8, Bashir abruptly ordered the pipeline shut after warning Juba over backing rebels in the north.

Analysts say his order came after rebel attacks which humiliated the authorities.

South Sudan denies supporting cross-border insurgents.

A careful pipeline shutdown requires several weeks to avoid damaging the infrastructure, giving diplomats time to try to resolve the deadlock.

The International Monetary Fund (IMF) estimated in May that Sudan's economy would get a boost of nearly $500 million (384 million euros) this year and about $1.5 billion in 2014 if the oil deal were implemented.

Those figures cover transit fees and compensation for the loss of the South's oil at separation.

South Sudan, which said petroleum provided 98 percent of its revenue before last year's shutdown, would gain billions of dollars in revenue from its shipments.

Despite the potential financial benefits, oil has been used "for pressure and blackmail, as opposed to an avenue for economic synergy," veteran columnist Mahjoub Mohamed Salih wrote in The Citizen newspaper on Sunday.

African Union officials have said their top negotiator Thabo Mbeki made "urgent proposals" to both sides for resolving the disagreement.