South Sudan is set to complete the shutdown of its oil production on Saturday, following a dispute with the neighboring Sudan, reports said Saturday.

The country decided to go ahead with the shutdown after talks between President Salva Kiir and his Sudanese counterpart Omar al-Bashir on Friday failed to produce a deal to end the dispute over transit fees for oil. The leaders met in the Ethiopian capital of Addis Ababa on the sidelines of the 18th African Union Summit.

South Sudan alleges that Sudan is seizing its oil, meant for export, during transit through its territory to a northern port. Sudan proposed a transit fee of $36 a barrel, while South Sudan is offering about $1 a barrel. The country has reportedly accused Sudan of stealing $815 million of its oil.

At the time of declaring independence in July 2011, South Sudan gained control of nearly 75 percent of Sudan's oil production totaling around 500,000 barrels a day. China is the leading destination for Sudanese oil exports. Both South Sudan and Sudan are heavily dependent on oil revenues.

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