KERRY SEES POTENTIAL FOR PROGRESS IN SUDAN TALKS

Sudan's government is looking at a new offer by United States President Barack Obama and would prefer to find a negotiated settlement to a dispute over a key oil-producing region, Senator John Kerry said on Wednesday, Reuters reports.

Kerry, the powerful Democrat who chairs the Senate Foreign Relations Committee, said he was guardedly hopeful following a mission to the region which sought to spur crucial talks ahead of two referendums on January 9 which will determine the future of Africa's largest country.

'It's been slow, slower than one would like, frankly, but I think there is a potential for progress,' Kerry told reporters. 'I really came away with the impression if they can solve this, they would prefer to do that and they understand the stakes.'

Obama has offered to drop Khartoum from the US official terror blacklist provided it cooperates with the January referendums on whether southern Sudan becomes an independent nation and whether the oil-rich region of Abyei joins the north or the south.

Both votes were promised under a 2005 peace deal which ended Africa's longest civil war. But arrangements for the Abyei vote are hotly contested, raising fears it could be delayed and thus spark new conflict.

Secretary of State Hillary Clinton said on Wednesday the United States would continue to seek a negotiated deal to all issues between the two sides, possibly before the January referendums take place.

'Either they are going to stay married and get along better or they are going to get divorced and it needs to be a peaceful, civil divorce,' Clinton said following a meeting with Foreign Minister Ahmed Aboul Gheit of Egypt.

Southern Sudan has suggested that it might simply annex Abyei and then offer the north financial compensation to soften the economic blow of secession, an outcome which would deprive the north of more than half of Sudan's total oil output of 470,000 barrels per day.

The US State Department, in what appeared to be a new tack, suggested on Tuesday that it could accept an agreement over Abyei without putting it to a plebiscite.

'While it is theoretically possible that the referendum could still go on on schedule regarding Abyei, we recognize that that is increasingly problematic,' State Department spokesman P.J. Crowley said.

'Given that there is not agreement between North and South on the details of that referendum, if they are able to arrive at a different course of action, that is up to them. But it has to be a mutually agreeable alternative.'

Obama's latest offer represents a significant sweetener for Khartoum, which has been seeking to end the international isolation imposed on it by its 1993 inclusion on the official US list of state sponsors of terrorism.

While Sudanese officials have publicly said they would not bend on Abyei — which has been a flashpoint for conflict in the past — Kerry said he sensed Khartoum's ruling National Congress Party was carefully weighing its next steps.

'The bottom line is that the NCP received President Obama'a initiative with seriousness, with receptivity, with gratitude for the intervention,' Kerry told reporters on a conference call. 'I think it's helped them to see that there's a different equation here.'