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South Sudan: Full Oil Production Could Take One Year

Thu, 08/30/2012 - 6:55am
MICHAEL ONYIEGO, Associated Press

JUBA, South Sudan (AP) — South Sudan says could take will up to a year to restart oil production in some of its oil fields due to damage done by Sudanese forces during military clashes in April.

Assessments are being conducted by teams from the ministry and oil operators in the country to determine exactly how long it will take to resume pumping oil, said Sudan South Sudanese Minister of Petroleum and Mining Stephen Dhieu Dau. All of South Sudan's oil is produced in Unity and Upper Nile states along the border.

Upper Nile's field could take four to six months to resume full production, while the Unity field could take between 10 and 12 months, he said.

South Sudan estimates that around 80 percent of its oil production comes from Upper Nile State. The oil blend produced in Unity State is lighter and easier to refine and fetches higher prices in international markets.

South Sudan inherited around 75 percent of Sudan's oil production when it split off from Sudan and became an independent country in July 2011. But the south must export its oil through pipelines in Sudan, and the two have been unable to agree on fees for the use of those pipelines.

South Sudan shut down its oil production in January after accusing Sudan of stealing its oil exports. Sudan said it was taking the oil in lieu of unpaid transport fees. Oil accounted for nearly 98 percent of South Sudan's revenue, and its economy has suffered during the shutdown.

The two countries recently reached an agreement in principle on those fees after months of negotiations in Addis Ababa, Ethiopia. The agreement won't be signed until other issues outstanding from Sudan's split have been resolved. Still on the table are the key issues of border demarcation and the status of Abyei, a region claimed by both sides.

Dhieu Dau is part of the South Sudanese negotiation team and will take part in the talks when they resume Monday in the Ethiopian capital. According to Dau, South Sudan is "expecting the agreement to be signed before the 22nd of September," when the African Union deadline for the talks expires.

The oil agreement has raised hopes that the long-running negotiations will finally produce a deal between the two sides on the contentious, outstanding issues. South Sudan says it will still pursue plans to build an alternative pipeline so it doesn't have to export oil through Sudan.

Juba has signed memoranda of understanding with Djibouti and Ethiopia as well as Kenya as potential partners in a new pipeline. The oil minister says feasibility studies for each pipeline should be completed in the next six months, at which point the ministry will decide which project to pursue.

Some analysts predict that South Sudan's oil reserves will decline in the next few years, making the pipeline project impractical. But the petroleum minister says the country expects its oil production to increase over the next five years, making the construction of a new pipeline "a must."

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