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World's newest country: South Sudan's oil remains a sticking point

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Insiders to the north-south talks over the past five months say that negotiating the future of the north's and south's shared oil industries has been one of the most contentious aspects of the African Union-mediated and US-supported talks.

Cutting a new deal

This comes as no surprise given the stakes of the talks. They were intended to result in a "deal" for wealth-sharing beyond July 9, a replacement for the current 50-50 split which has evenly divided Sudan's oil revenues between the northern and southern governments for the past six years of fragile peace.

A sticking point for the southern government is that the majority of the revenues that both sides current accrue comes from oil drilled in the south – oil that Juba feels it should be able to exploit exclusively after independence. For its part, Khartoum has the "hardware" needed to extract southern oil, and given its own economic challenges, needs to use its advantage to keep its oil revenues as high as possible in the months and years to come, if only through expensive pipeline fees charged to the southern government.

After months of tense negotiations and reportedly numerous attempts by oil experts from the Norwegian government and elsewhere to provide viable proposals for the two sides, it is now certain that there will be no deal on oil before the north and south become separate states on Saturday. But not reaching a deal soon could be dangerous, warns US Ambassador Princeton Lyman, President Barack Obama's Special Envoy to Sudan.

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