South Sudan's government has agreed to pay $262 million it owes for the transfer of oil through Sudan, according to South Sudan media reports.
Most of South Sudan's oil revenues come from oil earnings. The civil war and falling global oil price have threatened to cripple the country, bringing civil service salaries and security to a standstill for seven months.
"It was agreed that the government of South Sudan should pay off the outstanding arrears which were not paid," said Michael Makuei, South Sudan's information minister, as quoted by Juba Monitor.
"We want to avoid renegotiating the existing oil deal."
According to South Sudan's Finance Ministry, arrears owed to its northern neighbor are estimated at $3.2 billion U.S. dollars, of which $262 million will be provided through in-kind shipments.
South Sudan is a landlocked country. It uses a Sudanese pipeline to transfer its oil to global markets in an agreement with the government of Sudan.
Under the terms of the 2012 deal, South Sudan was to pay $9.10 per barrel to transport oil through two pipelines passing through Sudan alongside a $3.2 billion dollar package to compensate for the loss of most oil reserves to the north.
Meeting this week in Sudan's capital Khartoum, South Sudanese President Salva Kiir and his Sudanese counterpart Omar al-Bashir agreed to speed up implementation of a 2012 cooperation agreement dealing with issues of security, trade and oil.
By Parach Mach in Juba, South Sudan
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