South Sudan`s oil minister, Puok Kang Chol, called the agreement a real step towards closer cooperation between the two countries. He said a Sudan coordination office would be set up in Juba. The ministry announced two concession contracts with two gold and mining companies operating in the Red Sea State for the exploration of Block 2A-1 and Block 6K. They also said that an economic agreement had been reached to allow the recovery of stagnant oil production in South Sudan. The ruling elites in Juba, who have strangled South Sudan`s oil sector, are still undecided on how to manage future relations with civilians who share power with the army in Sudan`s interim government, leaving open the possibility of future differences. Sudan has two main export pipelines that are heading north across the country to the Bashayer Naval Terminal, located about 25 miles south of Port Sudan. Most crude oil and refined product warehouses are also located at the Bashayer Naval Terminal. The Bashayer Naval Terminal has a 2.5 million.b/d warehouse and an export/import facility with a transload capacity of 1.2 million .b/d. The Greater Nile Petrole Operating Company (GNPOC) operates the terminal. At present, South Sudan does not have significant storage capacity. South Sudan exports all of its crude by pipeline to Sudan.
Minister Abdelrahman said other concession agreements, which will amount to 20, will be signed next week. The recent riots in Sudan`s largest port are another problem that threatens oil hopes in South Sudan. Although Sudan has negotiated an agreement with rebel groups in the South, other regions say they have been historically marginalized and fear being excluded from the new settlement. If oil wealth is not evenly distributed between the two sides, the deal could be threatened, analysts say. Following the outbreak of fighting over oil facilities and a controversial country, the United Nations has threatened both sides with sanctions if they fail to reach a comprehensive agreement. KHARTOUM, December 23 (Xinhua) – Sudan and South Sudan on Monday signed an agreement to renew an oil deal and related economic agreements until March 2022, according to the official SUNA news agency. At the time of al-Bashir`s fall, Juba and Khartoum had agreed on a more or less constructive relationship. The agreement was extended last year under the transitional government until March 2022, indicating that both sides will continue to cooperate in the oil trade. However, the interim government in Khartoum presents a new dynamic for South Sudanese politicians and uncertain relations could lead to a situation where cooperation is no longer assured.
African Union mediators have yet to confirm that an agreement has been reached, but Sudanese President Omar al-Bashir and South Sudanese President Salva Kiir are expected to sign an agreement on Thursday. Sudan will also provide assistance for technical assistance to Blocks 3 and 7 in its southern neighbourhood. Disruptions in oil production, disputes over the sharing of oil revenues and lower oil prices have had a negative impact on both economies. In January 2012, South Sudan announced that it was halting its oil production due to a dispute over oil transit royalties. The conflict became violent after that, when the South Sudanese army – the Sudan People`s Liberation Army (SPLA) – and Sudanese opposition forces took control of the oil field for more than a week and destroyed critical infrastructure, temporarily reducing Sudan`s oil production by more than 50%. The conflict was resolved in November 2012, with the support of the international community, and the two governments agreed on transit charges and compensation for production losses.  The unity government of South Sudan, formed in February to end six years of civil war, is seen by critics as little more than a common agreement to ensure that both sides benefit