South Sudan Oil Output Down 20,000 B/D Since July Secession

South Sudan Oil Output Down 20,000 B/D Since July Secession

Newly-formed South Sudan’s daily oil output has dipped by about 5% since declaring its independence from the north in July, due primarily to a lack of skilled workers and a range of logistical issues, Minister of Petroleum and Mines Stephen Dhieu Dau said on 22 November. Following the south’s secession and closing of the border with the north, production fell by some 20,000 b/d to around 350,000 b/d. Sudan decided to pull hundreds of its oil workers out of the south, leaving only a fraction of expatriate workers behind to help South Sudan run its oil fields.

“South Sudan has been marginalized in the management of the oil sector. South Sudan, in terms of technical experience as per human resources, was not there,” Mr Dau told reporters. “After independence…most of the Sudanese decided to leave the oil fields, which left a gap in the oil field management and created a decline also,” he added. The minister added that the new government was calling for “experienced” South Sudanese nationals to return and work for its oil sector, and expected the current shortfall of skilled labor to be addressed within the year.

South Sudan’s petroleum ministry on 21 November revealed it had sold some 200,000 b/d of crude oil to international buyers, despite the long standing deadlock in negotiations between the north and south over issues related to the oil sector (MEES, 11 July). “As from 9 July to 31 December, South Sudan has sold 33.4mn barrels at a value of $3.2bn from the producing blocks,” Mr Dau said in a statement, adding also that the ministry was currently in the process of assessing the feasibility of building both a new refinery and cross-border pipeline, after admitting that “interruptions” along the border with Sudan had recently hampered the movement of equipment and spare parts. “This is affecting normal and smooth production,” he said.

Earlier this month, newly-elected President of South Sudan Salva Kiir issued an order to divest Sudan’s national oil company – Sudapet – of its shares in South Sudan’s oil fields, and in turn transfer them to Nilepet, South Sudan’s state-owned firm. With the decision being imposed retroactively to 9 July – the day of South Sudan’s secession from the north – Sudan would be required to transfer to the south any money Sudapet had received since that date. The sum, South Sudan has said, amounts to around $3.2bn. “The Republic of South Sudan is making it clear that this new nation and not Khartoum or [any] other entity shall control the management of its natural resources,” the Ministry of Petroleum and Mines said in a statement on 22 November.

The Sudanese Foreign Ministry has since expressed its astonishment over the decree, with Sudan’s state-owned SUNA news agency quoting a spokesman for the ministry as saying that it was surprised by both the move and its timing, and considered it to be an odd step which was contradictory to the spirit of cooperation that the Sudanese government has continually strived to adopt.

Meanwhile, a top South Sudanese official has said that Sudan is demanding up to $15bn in compensation for lost oil revenues after the secession, and has revealed it no longer wants the African Union to mediate negotiations with the south. “They want the south to shoulder the responsibility to compensate them for all the consequences of secession,” South Sudan’s Minister for Peace and chief negotiator Pagan Amum told reporters in Juba on 22 November. While Sudan says it is in need of $15bn over the coming seven years to make up for the lost revenues, Mr Amum disclosed that the International Monetary Fund (IMF), the African Union and South Sudan have agreed on a figure closer to $5.5bn. Sudan’s Foreign Ministry is yet to comment on these figures.

Copyright MEES 2011.