Photo courtesy of United Nations Environment Program

Sudan and the new nation of South Sudan have made a breakthrough step toward peace, agreeing on an oil deal on Friday. This significant accord comes one day after an August 2 deadline posed by the UN Security Council for the two nations to reach a peace agreement on outstanding issues post South Sudan's independence  in July last year.

Reports say that Pagan Amum, South Sudan's lead negotiator mediated talks in Addis Ababa- Ethiopia, where leaders of both countries have been meeting to negotiate outstanding issues -announcing that "Sudan agreed to take an average of US $9.48 per barrel from the landlocked country of South Sudan to export its oil through Port Sudan."

"Under this deal, the Republic of South Sudan will be paying US $8.4 for GNPOC pipeline and $6.5 for Petrodar pipeline", he announced. This is only $1 more per barrel than Republic of South Sudan had previously paid, he added.

This agreement is receiving praise and support throughout the international community, including from UN Secretary-General Ban Ki-moon.

“It is an important milestone for building good neighborly relations between the two states,” the Secretary-General's spokesperson said in a statement. “The Secretary-General is encouraged that the two Governments have significantly narrowed their positions on contentious issues.”

This key agreement comes one day after U.S. Secretary-of-State, Hilary Clinton visited South Sudan, on Friday, urging the two nations "to reach a timely agreement on all outstanding issues. In her statement, Clinton said that the economic viability of the two nations rests on resolving their differences.

South Sudan had completely stopped oil production in January accusing Sudan of rerouting its oil and confiscating its entitlements for export after the two sides failed to agree as to how much South Sudan pays for transporting its oil through Sudan's pre-existing oil infrastructure.

 Sudan had previously demanded that South Sudan pay US $36 to have its oil transported through its oil infrastructure to reach international markets.  South Sudan out rightly rejected. The demand had included processing fees paid to oil companies, as well.  

Saturday's agreement designates South Sudan to now pay $ 9.10 for Petrodar, the oil exploration company working in Sudanand $11.0 for GNPOC, the oil exploration and production company owned by Sudan, China, Malaysia and India.

Both Sudan and newly free South Sudan have been suffering economic and social hardships. A report by the World Bank said the economy is quickly headed toward an "economic cliff" in light of its decision to shut down oil production. The agreement is also said to include humanitarian action for the conflicting border areas.

According to the Sudan state news agency SUNA, negotiations are said to resume on August 26 between the two nations in efforts to resolve remaining points of dispute.