Analyst: Violence limits South Sudanese flow
Civil strife lowers prospects for full recovery of oil production in South Sudan, warns an analyst with Verisk Maplecroft, Bath, UK.
Production peaked at 329,000 b/d in 2011 but was shut in between January 2012 and May 2013 during a dispute with Sudan over pipeline fees.
Landlocked South Sudan, which became independent in July 2011, relies on Sudan for pipeline transit. Sudan relies on transit fees to offset the revenue it lost when South Sudan, where the main oil fields are located, became independent.
South Sudanese production now is about 165,000 b/d, according to Verisk Maplecroft Senior Analyst-Africa Emma Gordon.
Fields in Unity state, which produced about 100,000 b/d in 2011, are shut-in. A flare-up of violence heavily damaged the central processing unit at Thar Jath field, she reports.
The problem now is conflict between soldiers supporting President Salva Kiir and those backing Vice-President Riek Machar.
Fighting broke out in Juba, the capital, on July 7 and spread.
“With roughly 300 people killed and 36,000 displaced, the violence demonstrates that the country remains on the brink of civil war,” Gordon writes in a recent report.
An August 2015 peace agreement, designed to end a civil war that began in December 2013, has failed.
“It is particularly ominous for oil companies that political tensions are running high in Unity, where exceptionally bitter fighting during the war has continued despite the peace deal,” Gordon says.
Unity would be divided into three states under a controversial decree by Kiir to increase the number of South Sudanese states to 28 from 10, segmenting the country ethnically. The plan currently is suspended.
The instability “paints a damning picture for the prospects of oil production in South Sudan,” Gordon says.
Chinese producers have kept a skeleton staff of about 20 foreign workers in Upper Nile fields.
“A full return of personnel seems a long way off, particularly if violence in Juba, the company’s rear base continues,” Gordon says, adding that problems around Thar Jath in southern Unity are unlikely to be solved soon.