Sudan, South Sudan Reach an Oil Deal

Oct 1, 2012 | 10:15 GMT

Sudan, South Sudan Reach an Oil Deal
Sudanese Oil Minister Awad Ahmed al-Jaz at an oil facility in Heglig, Sudan, on May 2



Sudanese President Omar al Bashir and South Sudanese President Salva Kiir signed a deal late last week allowing South Sudan to resume oil exports, which had been cut off since January due to a dispute over transit and production fees. The agreement extends through 2015, and production is expected to begin in a few months before increasing to full capacity by mid- to late 2013.

Since South Sudan's secession from Sudan in July 2011, the two countries have found themselves in a mutually dependent economic relationship because South Sudan possesses 75 percent of the formerly shared oil reserves while Sudan controls the pipelines needed to export the oil to the international market. With each country's financial position growing increasingly difficult since the cutoff, they had little choice but to sign the deal to resume production. Though Khartoum will likely try to pressure Juba to sign a permanent deal while the new agreement is still in effect, South Sudan will continue to look for alternative export options that do not rely on its northern neighbor.

The countries can resume oil production, but South Sudan will keep looking for other export partners....

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