| ADDIS ABABA
ADDIS ABABA Former civil war foes Sudan and South Sudan are heading towards a deal this week that would allow the resumption of oil exports vital to the economies of both African countries, a Western official involved in the talks said on Tuesday.
Much could still go wrong, given profound mutual mistrust and failure to fully implement previous agreements, diplomats said, but the mood at the African Union-brokered talks appeared to be much brighter than in previous rounds.
South Sudan seceded from Sudan last year under a 2005 peace deal that ended decades of civil war but the two have yet to resolve a litany of issues related to partition. Border clashes almost boiled over into full-scale war in April, although tensions have abated since then.
Norway's Special Envoy for Sudan and South Sudan said he was confident both presidents would heed a call from the African Union (AU) to come to Addis Ababa to wrap up the two weeks of talks before a U.N. Security Council deadline of September 22.
"We appreciate the strong efforts the parties have made towards the outstanding issues and we are confident that they will reach an agreement before the end of the deadline," Endre Stiansen told Reuters on the sidelines of the talks.
"I think it will be a summit later on this week. The date I cannot say but I think there will be a summit. And the summit is necessary to close this deal," he said.
Norway is a mediator in the talks because it advises both nations on oil issues and is respected as a neutral party.
Neither side would confirm that Sudanese President Omar Hassan al-Bashir and his southern counterpart, Salva Kiir, would hold a summit in the Ethiopian capital before the U.N. deadline, but diplomats at the talks in a five-star hotel were optimistic.
"We've come a long way. There are still issues that need to be solved but it's doable. The atmosphere at the talks is positive," one diplomat told Reuters.
The landlocked South shut down its oil output - which accounted for about 98 percent of its state revenues - in January in a row with Khartoum over how much it should pay to export oil through the north to Red Sea ports.
But the two are "very close" to a final oil transport accord, another diplomat said, adding that the sides were discussing technical aspects of restarting production.
"Discussions for a final oil deal are in the last stage. There is no big obstacle left," the diplomat said.
Diplomats say the main goal now is to get Sudan to agree to a demilitarised border buffer zone, a first step toward settling broader disputes over the volatile, poorly demarcated frontier.
Sudan objects to a map proposed by the AU which puts a 14-km (8.7-mile) strip inside the South's territory. The land is fertile grazing ground for Arab tribes allied to Khartoum.
Diplomats said the two sides were discussing a deal that would see South Sudan's army pull out of the area, with its ultimate fate to be decided later.
"There is huge pressure on Sudan to say yes to the map. Experts are now discussing how to work around Sudan's security concerns," said a diplomatic source close to the South's delegation. "If Khartoum says no they will be blamed for the failure so they will probably move towards a compromise."
Once a buffer zone has been agreed, southern oil exports can resume, which would give a lift to both economies and an incentive to both sides to keep discussing other, more complex issues. But one of the most daunting - the fate of the contested Abyei border region - will not be solved in this round of talks.
Western powers hope for more significant progress once the sides agree to resume oil exports, which would take several months because the pipelines were flooded with water and some oil fields damaged during fighting in April.
(Editing by Alexander Dziadosz and Pravin Char)