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South Sudan will restart crude oil production from oilfields in the Unity state within two months, which could potentially derail OPEC and non-cartel producers’ deal to curtail global supply in a bid to reduce inventories and lift oil prices.
According to officials in South Sudan and Sudan quoted by local media, the situation at the Unity state oil sites “is completely secured”, with only minor damage incurred from rebel clashes, which would allow for production resumption within a month or two.
The Governor of the Unity state, Joseph Nguen Manytuil, has said the state was now free of rebels and pledged to mobilize more troops and local communities to protect the oil infrastructure “so that our oil resume production peacefully and as soon as possible without delay”, Sudan Tribune reports.
Earlier this week, South Sudanese embassy officials in the UAE said that South Sudan was determined to increase production despite ongoing civil war and the struggle for control of the country’s government through oil.
“We are planning to increase oil production as oil prices go up to increase our revenue and expand the ways of oil industry. We suffered the most due to low oil prices. Rise in oil prices is good news for us,” Mayom Alier, Deputy Head of South Sudan mission in the United Arab Emirates, said.
South Sudan gained independence from Sudan in 2011, but it has been a bloody road to establishing a stable government whose budget is dependent almost fully on oil. In December 2013, civil war broke out when President Salva Kiir Mayardit sacked the cabinet and accused Vice President Riek Machar of instigating a failed coup. The civil war ended in 2015—officially--but clashes have been frequent since.
As regards ramping up production, South Sudan vowed as early as in May of this year to resume pumping from fields that have not been operational since the start of the 2013 civil war. Almost all the oilfields in Unity state were forced to shut down then as well as some others in Upper Nile state.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.