S Sudan plans to close entire oil production

21 Jul 2013

(MENAFN) South Sudan is seeking to ship 6.4 million barrels of oil worth USD300 million before a planned shut down its entire production by the end of July following a row over its alleged support for rebels in neighboring Sudan, Reuters reported.

A month ago, Sudan, the sole conduit for South Sudan’s oil exports, accused Juba of supporting insurgents and that it would close two cross-border oil pipelines within 60 days and insisted output be shut by Aug. 7 unless South Sudan gave up support for the rebels.

The shutdown would hurt for both countries, as South Sudan might collapse without oil, the main source for the budget apart from foreign grants, while oil fees from Juba are essential to bringing down soaring inflation, which stokes opposition.

South Sudan had only resumed oil production in April, after turning off wells pumping around 300,000 barrels per day in January 2012 when both sides failed to agree on pipeline fees.

According to oil industry insiders, if the pipelines are closed it will take several months to restart production as they would have to be flushed of water and cleaned first.

The Sudanese Revolutionary Front (SRF) in April staged an attack on central Sudan, embarrassing the army on whose support President Omar Hassan al-Bashir depends.

South Sudan in turn accuses Sudan of backing rebels in its eastern Jonglei state, where fighting is making it impossible to realize government plans to search for oil with the help of France’s Total and U.S. Exxon Mobil.