12 January 2014

Sudan: Khartoum Agrees to Assist Juba in Restarting Oil Production in Unity State - Official

Khartoum/Juba — South Sudan's minister of Petroleum and Mining, Stephen Dhieu Dau, has arrived in Khartoum on a previously unannounced visit to discuss restarting oil production in Unity state following government army's recapture of the key state from rebel control

The Bentiu and Tharjath oilfields are situated in the Unity state and are believed to be producing around 45,000 barrels per day (bpd).

In Juba, a senior government official said that Dau is in Khartoum to deliver a message of "full commitment" to implementing cooperation agreement

"Yes, the minister is Khartoum. He went to deliver a message of assurance from the president of the commitment of the government to fully implement cooperation agreement," the undersecretary at the ministry of Petroleum and Mining Machar Ader said on Sunday.

Dau, who held talks with his Sudanese counterpart, Makkawi Mohamed Awad, on Sunday, told reporters in Khartoum that Juba seeks to restart oil production in Unity state, saying that this requires directing Sudan's Greater Nile Petroleum Operating Company (GNPOC) and South Sudan's Nile Petroleum Corporation (NILEPET) to work together for this purpose.

He pointed that talks addressed ways for helping oil operating companies in South Sudan particularly as they face security challenges in Unity state, adding that they discussed problems facing oil companies including supply, equipments, and technical needs.

The minister further said they also tackled needs of oil companies for Sudanese workers and engineers in Unity and Upper Nile states oilfields, affirming that committees from both sides would soon look into the issue.

Makkawi for his part expressed readiness to immediately meet requests made by South Sudan's petroleum minister so that oil could flow for the benefit of both peoples.

Oil companies in Unity state from China and India evacuated their workers after fighting broke out and made sure to shut down the oilfields there.

Ader said the oil in Upper Nile state continues to flow normally. "There is no interruption in the production and flow of oil in Upper Nile State. It is continuing to flow normally", Ader told Sudan Tribune in an exclusive interview.

The conflict in South Sudan erupted on 15 December with fighting among a group of soldiers in the capital, Juba. The violence quickly spread to several states, cleaving the nation along the ethnic faultline of former Vice president-turned rebel leader Riek Machar's Nuer and President Salva Kiir's Dinka.

Nearly 10,000 people have been killed in the conflict, an International Crisis Group analyst was quoted last Friday by the New York Times as saying. In December, the United Nations had put the death toll at about 1,000.

Last Monday, the Sudanese president, Omer Hassan Al-Bashir paid a solidarity visit to Juba to support his southern counterpart, Salva Kiir Mayardit. He agreed to send 900 Sudanese oil workers to help restart oil production.

On Wednesday, Reuters quoted oil industry sources as saying that South Sudan's exports of heavy sweet Dar Blend will drop to 4.6 million barrels, or about 148,000 bpd, in January in a revised loading programme, one source said, down about 21 percent from 187,000 bpd originally planned.

Dar Blend is produced in the Upper Nile state, in Blocks 3 and 7 that are operated by the Petrodar Operating Company.

Two of the seven cargoes that had been scheduled for loading in January have been deferred to February, he told Reuters.

Exports of Nile Blend, another Sudanese crude, have also dropped after production was shut in South Sudan's Unity state last month. The grade is also produced in Sudan where output is stable.

In a revised loading programme seen by Reuters, two Nile Blend cargoes will load in January, down from three originally, the sources said. These include a cargo that was scheduled to load in December.

Sudanese officials downplayed any adverse impact of complete oil shutdown in South Sudan despite transit fees forming an integral part of the 2014 budget.

Khartoum gets a fixed fee from Juba for every barrel of oil exported through its pipelines which helps it cover a portion of its budget hole and more importantly provides a stable source of hard currency needed to import food.

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