UPDATE 3-Sudan denies delaying south's oil exports

(Recasts with Sudan army, rebel comments, details)

* South Sudan oil flows through north suspended since April

* Sudan blames delays in creating demilitarised zone

* Darfur rebels set up camp in area - SUNA

KHARTOUM/JUBA, Nov 19 (Reuters) - Sudan and South Sudan have

not yet agreed on how to demilitarise their border - a condition

for resuming oil flows, Khartoum said on Monday, but denied it

was deliberately delaying the economically vital trade.

Newspaper reports about a possible oil export delay knocked

the Sudanese pound to a historic low against the dollar,

illustrating the importance for both countries of getting oil

from landlocked South Sudan's fields via the north for export.

"Sudan has not notified South Sudan that it is not ready to

receive southern oil exports through its territory," foreign

ministry spokesman El-Obeid Morawah said when asked about news

reports in the past two days.

He said both sides had yet to set up a demilitarised border

zone that they agreed in September had to be in place first.

"The security teams on both sides have agreed to urge both

security sides, in Khartoum and Juba, to speed up implementing

the security agreements," he said.

South Sudan's government could not be reached for comment.

In January, South Sudan shut down its entire output of

350,000 barrels a day after tensions with Sudan over export fees

escalated.

Having come close to war in April, the neighbours agreed to

an African Union-brokered deal on export fees in September and

to pull their armies 10 km (6 miles) back from the ill-defined

border.

Any delay to a resumption of the oil trade would be a

serious blow to both countries. Sudan benefits from South

Sudan's oil exports because Juba has to pay a fee for using

northern pipelines and a Red Sea port.

Last month, South Sudan's oil ministry said it had ordered

oil firms to turn on wells to start exports within three months

as pipelines and oilfields needed to be prepared first.

Oil industry sources there said the oil companies, mainly

from China, Malaysia and India, were still ready to pump.

"If Khartoum stops dishonouring their agreement then we can

start, even tomorrow," said Farouk Gatkuoth, deputy chairman of

Sudd Petroleum, a 50-50 joint-venture between Petronas and South

Sudan's state-owned Nilepet.

Ongoing fighting between Sudan and rebels in its southern

borderlands has hampered the plan to set up a border zone and

the state news agency SUNA said on Monday that rebels from the

Darfur region had set up camp in a disputed border region.

Sudan's army spokesman al-Sawarmi Khalid told SUNA rebels

from Darfur had set up camp just 10 km from the border in a

disputed strip of land called Samaha, or Miles-14, that was a

major obstacle during the September talks.

For their part, rebels of the Sudan People's Liberation

Movement-North (SPLM-North), which have formed an alliance with

Darfur rebels to topple Sudan's President Omar Hassan al-Bashir,

accused the air force of bombing two villages on Saturday and

Monday on the Sudan side of the border.

Sudan accuses South Sudan of supporting the SPLM-North,

charges diplomats find as credible as claims from Juba that

Khartoum is backing rebels on its territory.

(Writing by Ulf Laessing; Editing by Robin Pomeroy)

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