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New Sudan oil deal must ensure transparency-report

by (c) Copyright Thomson Reuters 2011. Click For Restrictions. http://about.reuters.com/fulllegal.asp | Thomson Reuters Foundation
Thursday, 6 January 2011 00:00 GMT

(c) Copyright Thomson Reuters 2011. Click For Restrictions. http://about.reuters.com/fulllegal.asp

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* South Sudan expected to secede this year

* New oil-sharing deal must enshrine transparency

* Mistrust over oil risks new conflict

By Opheera McDoom

KHARTOUM, Jan 6 (Reuters) - A new oil-sharing deal between Sudan&${esc.hash}39;s north and soon-to-be independent south must ensure transparency and independent monitoring to avoid mistrust that could fuel future conflict, Global Witness said on Thursday.

Southerners will begin to vote on independence on Jan. 9 and are expected to choose secession under a 2005 north-south peace deal that ended Africa&${esc.hash}39;s longest civil war.

The accord shared revenues from oil in the south roughly 50:50. Around three-quarters of Sudan&${esc.hash}39;s oil comes from wells in the south but the infra structure is in the north so some form of sharing of the 500,000 barrels per day of production will be necessary post secession.

In 2010, total revenues were US${esc.dollar}4.5 billion.

The resource campaign group Global Witness said any new deal must learn from the past and demand transparency with regular publishing of all figures, independent monitors, audits, and a dispute resolution mechanism to avoid mistrust.

"A new oil deal between north and south is critical to preventing a return to full-scale war," it said in a report on Thursday.

"Global Witness is calling for any new oil deal to make compliance with the deal itself easily verifiable, be regularly validated by an independent monitor, and incorporate a dispute resolution mechanism."

In 2009 the group discovered that the dominant oil firm in Sudan, China&${esc.hash}39;s CNPC, was reporting different oil production figures to Sudan&${esc.hash}39;s energy ministry, prompting an unprecedented Khartoum-sponsored oil transparency day last year.

Promises made then by the energy ministry included a full independent audit of the oil sector since 2005, which has been approved and publishing daily output figures, which has stopped.

"The last time that the Sudanese government published detailed figures on the oil revenue sharing was June 2009. Since then, there has been a substantial decrease in the amount of information provided to the public," the group said.

"As such, the total information available today represents an overall step backwards in transparency terms: far less data is being published by the Sudanese government now than it was in 2008 and the first half of 2009, which even then was insufficient to be able to verify the oil revenue sharing."

It also said the explanations given by CNPC and the ministry for the discrepancies in oil production from blocks in the south had been discredited by industry experts and no data supporting the claims had ever been produced as promised.

Sudan&${esc.hash}39;s government had said CNPC reported oil production including water and was measured at a different pressure and temperature to their figures.

"The explanations provided by both the Sudanese government and CNPC for why their oil production figures do not match each other do not stand up to scrutiny -- the government&${esc.hash}39;s explanations have been discredited by respected oil experts," Global Witness said.

"In addition, data that could have been provided by the Sudanese government or the oil companies to back up their explanations has not been forthcoming," it added.

Sudan&${esc.hash}39;s opaque energy sector has been dominated by Chinese, Malaysian and Indian firms after Western companies withdrew because of U.S. trade sanctions imposed in 1997 and allegations of rights abuses during the north-south civil war.

(Editing by Lisa Shumaker)

Our Standards: The Thomson Reuters Trust Principles.

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