View of an oil field in South Sudan. The country intends to resume oil
production from the main oil wells in Unity and Upper Nile states. FILE
PHOTO | HANNAH MCNEISH | AFP
The government of South Sudan intends to resume oil production
from the main oil wells in Unity and Upper Nile states by September 2.
Oil
Minister Ezekiel Lol Gatkuoth announced that the Tharjiath oilfields
Unity State and Upper Nile, which were affected by the civil war, will
be fully operational by the end of the year.
The
government hopes to produce about 40,000 barrels per day from the Unity
wells to boost the current low production of 130,000 barrels per day,
down from the 350,000 the country used to produce before the war broke
out in 2013. Currently, only the Faloij oilfields in Upper Nile are
operating at full capacity.
Lily Akol, Deputy Minister for Information, said that test runs will begin on August 26 before full production starts.
“Our crude oil will be tested, which means it will be pumped through the pipelines,” she said.
However,
there is growing concern that Juba is giving too much control to Sudan
in the oil production process, given that Khartoum has taken over
security of the oil wells in Upper Nile and Unity states.
President Omar al-Bashir, who presided over the peace agreement
in Khartoum, has been pushing for the resumption of oil production to
rescue his country’s ailing economy.
The June 27
Khartoum Declaration provided for collaboration between Sudan and South
Sudan in the rehabilitation of the damaged oil installations in the
Unity State, such as Blocks 1, 2 and 4. The oil from Unity is of higher
quality, compared with other wells, because it contains less sulphur.
Concerns
But
John Pen, who represented South Sudanese civil society in the Khartoum
talks, says they are concerned about President al-Bashir’s interests in
the oil business.
“While everybody appreciates the
efforts made by President al-Bashir to bring peace to South Sudan, it is
clear that his desire to see the resumption of oil production far
overshadows the peace process. So long as Sudan can secure the
oilfields, they may not mind if we continue to fight in other areas,”
said Mr Pen.
South Sudan pays Khartoum a transportation fee of $25 per barrel for the use of the crude pipeline to Port Sudan.
Sudan
is still paying for the pipeline, which was built jointly by India and
China despite having lost 75 per cent of its oil reserves when South
Sudan gained Independence in 2011.
Sudan is negotiating
with Indian state-owned Oil and Natural Gas Corp to withdraw a case it
filed in a London arbitration court demanding between $300 million and
$400 million for the 25 per cent stake that Khartoum bought from the
Greater Nile Oil Project, and $100 million for the cost of building the
pipeline.
South Sudan is also keen on resuming oil
production to help revive its economy. On August 20, Finance Minister
Salvatore Garang Mabiordit announced a $600 million budget that is
supposed to be funded mainly by oil revenue, which accounts for 98 per
cent of government income.
Since independence in 2011,
South Sudan has relied on oil as the main source of revenue, but
production slumped when the civil war broke out in 2013.
James
Oryema, a rebel spokesperson in Kenya, said that Juba is using the
resumption of oil export as a public relations that it can then use as
collateral for international loans.
However, Mr Oryema
said full production will take some time because some of the facilities
were extensively destroyed in the two regions.
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