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Sudanese president Omer Hassan al-Bashir has threatened to shut down the pipelines from the landlocked Southern Sudan to Port Sudan on the Red Sea unless a revenue sharing deal is reached by the end of July.
Later this month Southern Sudan will formally declare its independence from Khartoum’s control following an internationally supervised referendum in January which resulted in an almost unanimous vote in favor of secession from the North.
A number of contentious post-referendum issues have yet to be resolved, including border demarcation, citizenship, apportioning the national debt and oil sharing, Sudan Tribune reported.
The hydrocarbon issue is particularly important because energy exports constitute the majority of the country’s export earnings.
Sudan’s ruling National Congress Party and the Sudanese People Liberation Movement are currently attempting to negotiate compromises on these issues assisted by mediation efforts of the African Union in Ethiopia’s capital Addis Ababa.
While the southern Sudan holds around 75 percent of Sudan's oil reserves, the north has both the country’s refineries and pipelines, leaving the south needing Khartoum's cooperation to sell its oil even as the north needs a portion of its southern neighbor's revenue resources.
Currently northern and southern Sudan are splitting the proceeds of hydrocarbon sales in accordance with the terms of the Comprehensive Peace Agreement signed in 2005.
By. Charles Kennedy, Deputy Editor OilPrice.com
Charles is a writer for Oilprice.com