South Sudan to boost oil production by July

Petroleum Minister, Dak Duop Bischok, said oil production had dropped significantly due to the conflict which damaged some oil fields and facilities in the former Unity State.

The South Sudanese government depended on oil for 98 percent of its revenues. But since the outbreak of violence in December 2013, oil production has dropped from 300,000 to 120,000 barrels per day.

According to government officials all the oil fields in the former Unity State and others in former Upper Nile State were shut down, leaving Paloch as the only operational oil field at the moment.

“At the moment, oil production is between 120,000 and 130,000 barrels per day in Paloch,” Bischok said. “We are working to increase it.”

Bischok said his ministry was working to repair the damages caused to the oil infrastructure during the conflict to resume production in all oilfields.

Given the relative peace, his ministry plans to resume production in Unity State to supplement production in Paloch oil fields and increase the total production to 300,000 barrels per day, he said.

“We are now preparing to resume in Tharjath oil field and Unity oil field. Our security elements are on the ground and we are now preparing to go out in the field to resume work in Unity,” he said.

Bischok said government officials were working with oil companies and experts to identify the extent of the damage so repairs can be carried out to eventually increase production.

“We talked to those companies who are shareholders like Nile Pet, BPOC, SPOC and GPOC. We talked to them then agreed that they will see into the challenges and resolve them and in July they will increase the production,” said Bischok.

Before the outbreak of violence more than two years ago, the South Sudanese government was building two oil refineries in the former Unity and Upper Nile states. Bischok said the refineries were damaged during fighting, but that a company that was building a refinery in Unity State was ready to go and start reconstruction.

“About the refinery in Upper Nile, we wrote to the owner of the company and we are waiting for him to come and we discuss whether to go for new terms while he continues building the refinery,” Bischok added.

In addition to a drop in oil production levels, South Sudan has been hit by the recent slump in global oil prices.

Moreover, landlocked South Sudan depends on Sudanese oil infrastructure to transport its oil to the Red Sea for export. Sudan previously charged South Sudan about US$ 24.50 a barrel in transit fees. But in February, the two countries agreed that transit fees would be tied to current crude oil prices.

According to economic experts, South Sudan’s government is earning only about US$ 10 per barrel of crude oil compared to an international oil price of less than US$ 40 for the country’s Dar Blend crude, after paying pipeline and transit fees to Sudan as well as a producer’s share and other fees plus debts.