EXCLUSIVE-S.Sudan says can live off credit if north blocks oil

Fri Jul 8, 2011 8:46am GMT

* South Sudan becomes independent state on Saturday

* North threatening to block oil pipes if south fails to pay

* Groups have approached south offering credit - diplomat

JUBA, Sudan, July 8 (Reuters) - South Sudan can survive on credit, using its oil as collateral, if the north goes ahead with its threat to block pipelines after the south secedes on Saturday or if war between them breaks out again, officials told Reuters.

Such economic independence may give the new state an edge in tortured negotiations over oil rights with its old civil war foe which has received 50 percent of the revenues from southern oil for six years and which wants pipeline fees after secession.

"In case the south is forced not to export its own oil through the existing pipeline infrastructure through the north, we will use our resources to continue to live ... The south can still survive without a problem," the south's Director General of Energy Arkangelo Okwang told Reuters.

"If we are forced not to export our crude, we will definitely use some of our (oil) blocks to ensure we have roots," he said, roots meaning money for the government.

The south produces about three quarters of Sudan's roughly 500,000 barrels of oil output and depends on oil for 98 percent of its revenue. The south funnels its oil through northern pipelines to Sudan's only commercial port on the Red Sea coast.   Continued...

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