South Sudan shuts down more wells as crisis deal flops

South Sudan oil operators closed more 242 oil wells Friday as the government announced it has unearthed further oil theft of more than 40,000 barrels per day.

This came as President Salva Kiir failed to agree a deal with Sudanese leader Omar al-Bashir to unlock the impasse that has led to the on going shutdown.

The wells were closed in Palaug oil fields in the Upper Nile state which accounts for more than 60 per cent of the country's crude oil output.

Paluag has 600 oil wells and the 242 already shut down have halved the daily output of 250,000 barrels per day, officials said.

The field is held by Petrodar Oil Company, the biggest oil operator in the country.

However, Petroleum and Mining minister Stephen Dhieu Dau said his technicians had discovered that an additional 40,000 barrels were being produced per day on top of 230,000 daily barrels the company reported.

"After the resolution of shutdown, the company here tried to increase the production against what we are actually telling them to reduce to the minimum,” Mr Dhieu said, accusing former civil war Sudan of having a hand.

In the country’s Unity state, which officials now say accounts for nearly 40 per cent of the daily output, all the oil wells have been successfully closed down.

The Council of Ministers, in a sitting chaired by President Salva Kiir, resolved a week ago to shut down the oil pipeline to avoid continuous oil seizure by Sudan along the export route to Port Sudan.

South Sudan accused Khartoum of diverting millions of barrels of crude oil worth $815 million, a claim Khartoum denied saying it was compensating for transit fees South Sudan had not paid.

The two countries valuations for transit fees are wide apart, with Sudan asking for $36 a barrel, well in excess of international fees, while Juba has proposed $1.

Since South Sudan’s independence last July, the two countries, in talks mediated by the African Union in Addis Ababa have failed several times to agree on oil transit fees, border demarcation and the status of the disputed Abyei region.

The latest, held in Addis Ababa ahead of the AU summit this week stalled after President Kiir pulled out of a potential deal saying he needed to confer with his advisors.

Reports quotes a Khartoum negotiator as saying that Mr Bashir was ready to release ships carrying cargoes of crude from South Sudan in a bid to ease tensions.