Sudan, S. Sudan leaders fail to reach oil deal

By Yara Bayoumy and Aaron Maasho

ADDIS ABABA (Reuters) - The presidents of Sudan and South Sudan failed on Friday to resolve an oil dispute that has led to the shutdown of the South's crude output and threatened both countries' economies.

The row centres on how much landlocked South Sudan, which became independent last year, should pay to send its oil exports through Sudan to a Red Sea port.

Sudanese President Omar al-Bashir, using a walking stick, and South Sudan's President Salva Kiir met on the sidelines of a meeting of East African officials in Ethiopia.

The two discussed a deal that "would have frozen the situation and reverses the unilateral actions that had been taken by both", a source close to the talks told Reuters.

However, the source said the talks broke down when Kiir pulled out.

Ethiopian Prime Minister Meles Zenawi, who chaired the East African meeting, said the two had agreed to sign a deal even though they had reservations on numerous points, according to the source.

"Then Salva said, 'I regret to say that my delegation is still discussing the deal and I can't sign'," the source quoted Zenawi as saying.

South Sudan seceded in July under a 2005 peace deal that ended decades of civil war with Khartoum. It took with it about 75 percent of roughly 500,000 barrels per day of oil production.