South Sudan completely shuts down oil production

South Sudan said on Wednesday it had completed the shutdown of 871 oil wells that were producing about 350,000 barrels per day.

The wells were shut down in Unity and Upper Nile states, where the country’s crude output of Nile and Dar Blend are concentrated, Information minister Barnaba Marial Benjamin said.

"The shutdown of oil is complete, and it has been a blessing in disguise because we discovered that certain oil fields were being undercounted,” Dr Marial told reporters.

"In case of Greater Nile in Unity state, they were saying there were 230 wells. They have turned out to be 271,” he said, referring to a company operating in Unity state.

The other 600 wells are in Upper Nile state, a PteroDar holding. Recently, the government accused PetroDar of producing 40,000 barrels per day that it kept secret.

South Sudan, which seceded from Sudan and became independent in July last year, accounted for over 75 per cent of crude oil that the unified Sudan previously exported but it has no oil pipelines.

Crude theft

The African infant nation relies 98 per cent on oil for its revenues but it opted to shut down its oil production in protest against alleged theft by (north) Sudan en route to the export terminal at Port Sudan along the Red Sea coast.

Both Sudan and South Sudan, in talks mediated by the African Union in Addis Ababa, have failed many times to agree on a fair oil transit fees. The gap is too wide, with Sudan demanding $32 per barrel while South Sudan proposes $1 per barrel.

Juba is now set to build an alternative pipeline to Kenya to reduce reliance on the north's infrastructure.

Delegations from the two sides are scheduled to meet on Friday in Addis Ababa to try to reach a fair deal, more than a week after President Salva Kiir and his Sudanese counterpart Omar al-Bashir failed to do so at the recent African Union summit in Addis Ababa.

President Kiir wanted the agreement to be “comprehensive” to include the status of the disputed Abyei region and demarcation of the borders.

However, South Sudan says the shutdown of the oil production has enabled it to know how much oil it has.

“I am sure if there was no shutdown, we would still be hanging, thinking Khartoum would become reasonable and charge costs which are actually internationally recognised,” Dr Marial said.