South Sudan’s Oil Output To Hit 210,000 bpd By End 2018

South Sudan has resumed pumping 20,000 barrels per day (bpd) of crude oil from the Toma South oilfield, where production had been suspended since 2013 due to civil war, Sudan’s oil and gas minister Azhari Abdulqader told Al Jazeera.

Once maintenance work on five previously suspended oil fields is completed, it is expected to increase production to 80,000 bpd with the country’s oil output reaching 210,000 bpd by the end of the year, according to the report.

Income from oil accounts for 98 percent of the country’s budget.

Insecurity and the post-2014 oil price crash left the economy in tatters. But the increased oil output will revive South Sudan’s economic fortunes, according to Kimo Adiebo, an economics professor at the University of Juba.

“This increases government’s share in oil production and eventually oil revenue,” Adiebo told Al Jazeera.

“Additional oil revenue would enable the government to stick to its policy of not printing money – borrowing from the central bank – and hence more control of inflation and the exchange rate, leading to gradual macroeconomic stability.”

The most intense fighting between rebels and South Sudanese government troops took place at the Toma South oilfields, just over 30km from the border with Sudan, damaging oil production facilities.

But the country’s oil crisis could have been avoided, Professor Paul Moocraft, Director Centre for Foreign Policy Analysis, said.

“Juba cutting the oil off at the start of the post-independence war with Khartoum was the biggest self-inflicted political injury since Hitler declared war on the US,” said Moocraft.

“Clearly, independence has been a catastrophe for the south and a disaster for the north. Yet, in Africa, politics always trumps economic logic.”

South Sudan lacks the infrastructure to process its oil production. It is landlocked, forcing the young nation to use pipelines that go through Sudan to export its oil to the international market.

In June this year, Khartoum and Juba agreed to repair oil infrastructure facilities destroyed by the war within three months in order to boost production and said a joint force would be established to protect the oilfields from attacks by rebel forces.

“Maybe utter war-weariness and famine may allow some sense to prevail and the two main sides in the civil war may now work with Khartoum,” said Moocraft.

Oil production was at around 245,000bpd at the time fighting started. But plummeted to about 120,000bpd during the war from a peak of 350,000bpd, according to the World Bank.

Juba is seeking new investors in the oil sector after the government halted talks with French oil company Total about developing two oil blocks.

Total, alongwith two other oil companies, had been in talks about developing those oilfields since 2013.

But Total and the government failed to agree on the duration of the exploration and the commercial terms of a production-sharing agreement.

However, despite the peace deal, investors remain skeptical. Rights campaigner Beny Mabor told Al Jazeera that the prospects of attracting investors are bleak as long as conflict go unaddressed.

“Investment is equal to secure environment, Therefore, if there’s peace, the investors will come and if not, I’m afraid they might not either,” Mabor said.

Source: Al.Jazeera

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