Economically struggling South Sudan is determined to restore
security in the country in order to resume normal crude oil production
and attract investments.
The oil sector has been battered since South Sudan’s civil war started in December 2013.
With 95 per cent of the economy relying on oil revenues, the country hopes to restart normal crude production.
The
government has cut down on social welfare programmes like health and
education, put on hold investments in infrastructure, companies are
laying off workers and foreign firms are fleeing.
“The
past 18 months have been challenging for the oil industry because the
conflict and declining oil prices have led us to make painful decisions
and adjustments, but the worst is behind us,” said James Wani Igga,
South Sudan vice president.
Investors are giving the
country a wide berth at a time when it desperately needs resources for
exploration activities and building of refineries and pipelines.
Encourage investors return
The
country estimates that the current 3.5 billion barrels of recoverable
crude reserves represents only 30 per cent of its oil potential, with 70
per cent remaining unexplored. South Sudan also has three trillion
cubic metres of recoverable natural gas.
With
production currently standing at 130,000 barrels per day being produced
by Dar Petroleum Operating Company, and crude prices at the
international market at a depressed low of $48 per barrel, South Sudan’s
economy is struggling.
Restored security will not
only enable the country to increase production to pre-crisis levels of
300,000 barrels per day, but also encourage investors to return.
Before becoming an independent state in 2006, South Sudan was producing about 500,000 barrels per day.
“We
want to increase security in oilfields so that we can resume normal
production and attract investments from new explorers,” said Ezekiel Lol
Gatkuoth, South Sudan minister for petroleum.
The
government says it has so far managed to recapture key oil producing
states that were under the control of rebels, and increased security in
new blocks that it hopes to license to potential investors for
exploration.
“All the new blocks are now well
protected and this will help us move aggressively into upstream,” said
Mr Gatkuoth at the inaugural Oil and Gas Conference in Juba.
However, Sudd Petroleum Company and Greater Pioneer Operating Company, which halted production due to infighting are hesitant to resume normal operations.
However, Sudd Petroleum Company and Greater Pioneer Operating Company, which halted production due to infighting are hesitant to resume normal operations.
Repairs complete
Despite
the instability, Russian company Safinat, in a joint venture with
state-owned Nile Petroleum Corp, has completed repair works of the
control room of a new refinery in Unity State that was destroyed by
rebels.
The facility has an initial capacity to refine
10,000 barrels per day. Sudd Petroleum Company had halted production
due to the war. The company has the capacity to produce 80,000 barrels.
Greater
Pioneer Operating Company also plans to resume production of 38,000
barrels per day. The Safinat refinery which was built at a cost of $100
million is one of the four refineries, which will have a total refining
capacity of 127,000 barrels per day.
Trinity Energy has plans to build a refinery in the country, which will be completed by 2020.
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