South Sudan restarts oil production

THAR JATH: South Sudan restarted oil production on Saturday, ending a bitter 15-month row with former civil war foe Sudan and marking a major breakthrough in relations after bloody border clashes last year.

"The oil is now flowing," South Sudan oil minister Stephen Dhieu Dau shouted as he flicked a switch to restart production at a ceremony in the Thar Jath field in Unity state.

Sudan and South Sudan came close to a return to all-out conflict last year in bitter fighting along their un-demarcated border in April and March, a conflict prompted partly by their disputes over oil.

"This is a sign of peace," Dau said, as crowds danced in celebration. "No way are these sisterly countries to live without peace, and oil will play a great role to keep the peace in Sudan and South Sudan."

South Sudan halted crude production in early 2012, cutting off most of its revenue after accusing Khartoum of theft in a row over export fees.

At talks in Addis Ababa last month, the two countries finally settled on detailed timetables to ease tensions, after months of intermittent border clashes, by resuming oil flows and implementing other key pacts.

Earlier deals had remained stalled after Khartoum pushed for guarantees that South Sudan would no longer back rebels fighting in its border areas of South Kordofan and Blue Nile.

The shutdown has cost both impoverished nations billions of dollars. China was the biggest buyer of the oil.

South Sudan won independence in July 2011 after a referendum set up under a 2005 peace agreement that ended more than two decades of bloody civil war.

At independence, South Sudan won control of roughly 75 percent of the 470,000 barrels per day of crude produced by the formerly unified country.

The separation left Khartoum without most of its export earnings and half of its fiscal revenues.

Before the shutdown, oil provided South Sudan with 98 percent of its revenue.

But while South Sudan has the bulk of the oil fields, the pipeline infrastructure all runs north through Sudan.

During the oil shutdown, South Sudan said it was exploring the possibility of building new pipelines, either to the Indian Ocean through Kenya to the south, or to the Gulf of Aden through Ethiopia and Djibouti to the east.