South Sudan oil firms get green light to restart production

Workers at an oil concession flush out remaining oil
Workers at an oil concession flush out remaining oil prior to a shutdown in output by South Sudan, on January 29, 2012. South Sudan is looking to have oil flowing again by December following a damaging spat with Sudan.  FILE | NATION MEDIA GROUP

South Sudan has directed oil companies to restart the production of crude oil, nine months after it shut the pipeline due to a bitter dispute with neighbouring Sudan over oil transit fees.

Petroleum and Mining minister Stephen Dhieu Dau Thursday ordered the companies to immediately start pumping oil, expected to start shipping by December.

The decision comes three weeks after President Salva Kiir and his Sudanese counterpart, Omar al-Bashir, agreed in the Ethiopian capital Addis Ababa on nine cooperation agreements that include the transit fees.

The parliaments in both countries stood with their leaders and ratified the deals.

"Exportation of oil will take place when the technical preparations are in place,” Mr Dhieu said in a statement, “but we assume that in 90 days, part of our oil will be reaching the international market, not 100 per cent, but we will be able to produce and export oil.”

South Sudan was producing about 350,000 barrels of crude before it decided to close the pipeline in January, protesting alleged theft and confiscation of the commodity en route to the export terminal at Port Sudan.

Sudan admitted diverting South Sudan's oil entitlements, but claimed it was paying itself in kind for previous unpaid transit fees.

At secession in July, the newest African nation took with it more than 75 per cent of crude oil Sudan used to export, but the infrastructure is in the north.

The resumption of oil flow could rescue the struggling economies of both countries whose lives had been revolving so closely round oil revenues.

South Sudan relied 98 per cent on oil to meet budgetary obligations. The agreed transit fee is about $9 per barrel on average, in contrast to an average of about $6 per barrel before the dispute that forced the pipeline shut.

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