14 March 2013

South Sudan Orders Oil Companies to Resume Production

Photo: Isaac Billy/UN Photo
Omar Al-Bashir, President of Sudan (left)and Salva Kiir, President of the Republic of South Sudan (file photo).

Juba — South Sudan ordered oil companies and pipeline operators to immediately resume production of crude oil for delivery to international markets through Sudan on Thursday, a move seen as part of its commitment to implement an agreement signed this week.

Disagreement over oil charges prompted South Sudan to shut down oil production in January 2012, accusing Sudan of stealing its oil and diverting it into other pipelines. The two sides signed an agreement in September 2012, allowing Juba to resume export through Sudan, but disagreement of border security issues has delayed implementation of the deal.

Addressing journalists on Thursday, South Sudan's oil minister, Stephen Dhieu Dau, said the government was committed to the full implementation of the September agreement, particularly the issue relating to resuming oil production.

Before the shutdown South Sudan's 350,000 barrels per day provided 98% of the government's revenue. The closure has also effected Sudan's economy, which lost 75% of its oil production when South Sudan seceded in July 2011.

"The foreign oil companies and pipeline operators operating in the republic of South Sudan are hereby ordered and instructed forthwith to recommence and re-establish the production of the crude oil and all petroleum operations within producing blocks", Dau told reporters in Juba.

The minister said production would resume in blocks 1, 2, 4, 3, 7 and 5A.

South Sudan minister of petroleum and mining, Stephen Dhieu Dau announces that the government has ordered all foreign oil companies and pipeline operators to re-establish the production. March 14, 2013 (Photos: Larco Lomayat)

Minister Dau said Thursday's order revoked an instruction issued on 14 November 2012, which instructed oil companies working in South Sudan to postpone resumption of production due to additional conditions raised by the government of Sudan.

"The oil resumption order shall continue in all aspects to have full force and effect and be binding on the foreign oil companies and pipeline operators in the republic of South Sudan", he said.

"This supplemental oil resumption orders is issued without prejudices to order to suspend or terminate in future in whole or in part of the crude oil resumption production and petroleum operations in the republic of South Sudan as permitted by law or any agreement to which the republic of South Sudan is a party", Dau told reporters at a news conference.

South Sudan gained independence in 2011 from neighbouring Sudan after fighting repeated wars against successive Khartoum regimes, over inequality, separating religion from politics and identity.

Despite a six-year peace deal and almost 20 months since South Sudan's independence, the two countries have still not agreed on the status of disputed areas and large areas of the oil-rich border are not yet demarcated.

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