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Sudan To Hike Heglig Production, South Willing To Return To Talks

Sudan To Hike Heglig Production, South Willing To Return To Talks

Work to increase production at the disputed Heglig oil field to 80,000 b/d has already begun, and exploration deals for six blocks are expected to be signed before the end of the month, Sudan’s Minister of Petroleum 'Awad Ahmad al-Jaz said on 8 May. This comes only one week after Sudan restarted production at the field, which was at the center of the worst of last month’s clashes with Southern Sudanese forces. Juba has meanwhile expressed its readiness to resume talks with its northern neighbor over resolving the long-standing impasse, which in January prompted the South to halt all its oil producing activities with immediate effect (MEES , 30 January).

“We assure you the oil ministry is moving along in its program for this year, to upgrade production and increase it from Blocks 2 and 4 – which represent the Heglig area – to a ceiling of 80,000 b/d of crude,” Dr Jaz told the Sudanese Parliament. Before being seized early last month, the oil field at Heglig was producing around half of Sudan’s post-independence 115,000 b/d output. Less than two weeks after regaining control of the field from the South, Sudan announced it had completed a significant amount of repair work on the damaged infrastructure and had successfully resumed production at the field. Current production levels however are as yet unclear. Heglig is central to Sudan’s struggling economy, which was already being forced to deal with losing around 75% of its oil revenues to the South after last year’s secession (MEES , 11 July 2012). Dr Jaz also revealed that a global tender had already been conducted for six as yet unlicensed blocks, for which exploration deals are scheduled to be signed within the next month. “We received more than 70 offers from international companies,” the minister said.

Last month’s clashes were the latest chapter in an ongoing dispute between Sudan and its landlocked old civil war foe over payments Khartoum expects the South to pay for the use of its key oil infrastructure in the North. Sudan’s Minister of Finance ʹAli Mahmud revealed on 8 May that the dispute had resulted in a $2.4bn gap in the country’s public finances, and in turn caused exports to plummet around 83%. “Not reaching a deal with the government of the South over transit fees and petroleum servicing has caused a gap in the public financial sector worth about S£6.5bn ($2.4bn),” he told parliament. “Regarding exports, 1Q12 saw an 83% decline compared to 1Q11, and this happened because of the absence of oil,” he continued. Inflation for the month of April meanwhile was estimated to have hit 28.6% by the country’s Central Bureau of Statistics, up from the 22.4% posted one month earlier.

Despite these alarming figures, Sudanese President ʹUmar al-Bashir remained adamant Sudan’s economy was coping, categorically denying claims it had failed. “Yes we are facing economic difficulties, but we have not failed,” the president said told a panel of top experts and officials involved in the structuring of Sudan’s mooted five-year political and economic plan to 2017.

Following last week’s calls from the international community to put an end to the fighting and return to the negotiating table, South Sudan has made the first move and signaled its willingness to resume talks in the hope of reaching an agreement with the North. “Definitely we will discuss the oil, and if there is an agreement on the use of the pipeline again through the territory of Sudan, we will do that,” South Sudan’s Cabinet Affairs Minister Deng Alor said on 10 May. This comes after the African Union sent officials to both countries’ capital cities to lay the ground for a resumption of talks in the Ethiopian city of Addis Ababa – the scene of many earlier rounds of discussions which have all ultimately failed. Talks broke down in late March as fierce fighting erupted in pockets along the disputed North-South border (MEES , 2 April).

© Copyright MEES 2012.

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