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      • South Sudan uses oil to ease secession fears

South Sudan uses oil to ease secession fears

South Sudan will consider giving half its oil revenues to the Khartoum government for a limited period even if the region becomes independent next year, a senior minister has said.

Luka Biong Deng, the minister of presidential affairs in the government of South Sudan, sent a conciliatory signal to Khartoum in an interview with the Financial Times.

Under a peace agreement which ended the civil war between the north and south in 2005, revenues from the southern oilfields are shared equally between the two regions. The south will hold a referendum on independence in January and the most likely outcome is secession.

But Mr Biong said the division of oil revenues could continue. "Our concern is the economic viability ... and the unity of the north, which, I think, will make us even see whether we can continue with the same arrangement that we have," he said. "For a certain period of time, one would go for that."

The alternative - gaining independence with all the oil revenues - could trigger another civil war. By continuing to share the proceeds, the south could prevent the north's economy from suffering and avoid a dangerous flashpoint. If the south is forced to choose between defending independence with blood or buying it with oil, some would prefer the latter.

Any proposal to continue the 50-50 split would encounter opposition in the Sudan People's Liberation Movement, the former rebel army that rules the south. Hardliners with bitter memories of civil war revile the Khartoum regime of Omar al-Bashir, the president.

"For the time being, it is true oil can be used for a soft landing and making economic stability and co-operating with the north," said Mr Biong. "But in the long run, this one may not be viable."

Diplomats see oil as a possible safeguard against another war after January's referendum. The presence of these resources gives the north and south common interests.

About 75 per cent of Sudan's proven reserves of 6.3bn barrels are in the south but the pipeline that carries the oil to export terminals and refineries runs through the north. The south needs Khartoum's co-operation to sell its oil; the north needs revenues from its neighbour's resources.

Some 98 per cent of south Sudan's non-aid income comes from oil, while the corresponding figure for the north is 60-70 per cent.

"It is in the interest of the south not to see the northern economy collapsing," said Mr Biong.

Sudan produces 500,000 barrels of oil a day, earning about $8bn (€5.8bn, £5.1bn) for the southern government since the peace agreement and $13bn for Khartoum, which keeps 100 per cent of the revenue from fields in the north.

Khartoum's fears about losing its income from the south are clear: Mr Bashir has stationed security forces, known as "oil police", around some wells in the south, perhaps signalling that he will fight for control of the oilfields if the region secedes.

The SPLM is preparing for talks with Khartoum over post-referendum issues, including the use of the Nile, debt sharing and border demarcation.

Speaking in Juba, the south's capital, Mr Biong acknowledged that it would be hard to sell any kind of post-referendum partnership with Khartoum.

"Some people will say, 'we have been sharing with these people for a long time; the moment we decide to secede, that's it: we cannot share anything with them'," he said.

But Mr Biong's message to them was: "You need to be careful."

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