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South Sudan’s Leader Rejects AU Proposal for Oil Deal With Sudan

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Feb. 2 (Bloomberg) -- South Sudanese President Salva Kiir said he rejected an African Union proposal to end an oil dispute with Sudan because it required the south to pay the north billions of dollars and use its pipelines to export crude.

Kiir, who held African Union-mediated talks with Sudanese President Umar al-Bashir on Jan. 27 in the Ethiopian capital, Addis Ababa, said the proposal required South Sudan to ship crude from certain oil fields through Sudan’s pipelines to the Red Sea.

“It is difficult for me to accept a deal that leaves our people vulnerable, dependent and paying billions they do not owe,” Kiir told reporters today in Juba, the capital. “This is an attempt to ensure that we do not build our own pipelines.”

South Sudan took control of about three-quarters of Sudan’s output of 490,000 barrels of oil a day when it gained independence in July. The crude is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s ONGC Videsh Ltd.

South Sudan completed a shutdown of oil production on Jan. 26 after accusing government in Khartoum of diverting oil to its refinery, forcing companies to load crude onto ships it controlled, and blockading other shipments. Sudan said it confiscated oil to cover unpaid bills.

South Sudan signed a memorandum of understanding with Kenya on Jan. 24 to build a pipeline to the Kenyan port of Lamu.

To contact the reporter on this story: Jared Ferrie in Juba, South Sudan at jferrie1@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net