President Bashir fears a sharp decline in revenues for Khartoum following South's secession[Reuters]

Omar al-Bashir, the Sudanese president, has threatened to shut down pipelines carrying oil from South Sudan if there is no deal on oil before its independence next month.

"I give the south three alternatives for the oil. The North is to continue getting its share, or the North gets fees for every barrel that the South sends to Port Sudan," Bashir said in a televised speech on Tuesday.

"If they don't accept either of these, we are going to block the pipeline," he told his supporters in Port Sudan, the main terminal for all of Sudan's oil exports.

South Sudan will become a separate country on July 9, but the two sides have yet to come to a final arrangement on how to manage the oil industry after the split.

Nearly three-quarters of the oil output is pumped from the South, but most of the refineries, pipelines and ports are in the North, meaning the two will need to co-operate to some degree to keep crude flowing.

Under a 2005 peace deal that ended nearly two decades of civil war between the two sides, Khartoum gets about 50 per cent of the revenues from oil fields mainly based in the South.

Revenue-sharing

When the revenue-sharing comes to an end next month, Khartoum's income will fall by 36.5 per cent, Ali Mahmud, the Sudanese finance minister, said last week.

Sudan's oil minister said on Thursday that Khartoum had agreed to accept transit fees from the South, but the two sides were yet to set a price.

They were also discussing a "transitional arrangement" which would ease the financial impact on the North, the oil minister said.

North and South Sudanese officials have been involved in talks in Addis Ababa, the Ethiopian capital, aimed at reaching an agreement on a number of unresolved issues between the two sides prior to the partition.

But, besides the key oil sector, the two sides have also not reached a deal on contentious border issues.

Unresolved differences have led to violence with the Northern army invading the disputed region of Abyei last month.

Southerners voted overwhelmingly to secede in a January referendum.

North and South Sudan have been at loggerheads for most of their post-independence period since 1956.