South Sudan announces plans to resume full oil production. Here is what this could mean for the country

Salva Kiir - File Photo

South Sudan has announced that it is set to resume full oil production. This comes after the country relaunched its oil production at Toma South blocks 1, 2 and 4 earlier this year in August. The Toma South oil blocks include El Mar, El Toor, Manga and Unity oilfields.^[1]

“The field here has the capacity to produce 45,000 barrels per day and it’s only producing 20,000 barrels. The station wasn’t working for five years so some wells have issues such as electricity and now production here is at half capacity,” said Kuol Ajak of the operating company, Greater Pioneer Petroleum.

Currently, South Sudan produces 150,000 barrels of oil a day; 40 percent for operating costs, 20 percent to the country’s partners such as China’s CNPC (The China National Petroleum Corporation ) and it then shares the profit of the remaining 40 percent with Sudan.

There is hope that the resumption of oil production will kickstart the economy of South Sudan. In an interview with Aljazeera, the people of South Sudan stated that there was a hike in the prices of goods and services, but costs have started going down since the resumption of oil production. The government of Sudan is clamouring for help through investments in order to spring back into full production.^[2]

The government is working towards bringing production back to the previous level by the end of the year as oil contributes to 90 percent of their GDP. The government also hopes it can keep the oil flowing to kick-start its struggling economy.

Resuming full production in South Sudan is likely to increase competition with other oil producing economies with the high oil reserves in sub-Saharan Africa. Nigeria currently produces 2.53 million barrels per day while Angola has a turnover of about 1.69 million barrels per day.^[3]

Full oil production in South Sudan may create an opportunity for the African country to join OPEC (Organization of Petroleum Exporting Countries). The oil minister, Ezekiel Lul Gatkuoth had announced sometime in November 2017 that the country was interested in exploring the benefits of joining the oil producing bloc.

“I want to explore the possibilities of my country benefiting from membership in OPEC,” Minister Ezekiel Lul Gatkuoth told reporters in Vienna ahead of OPEC meeting in November 2017. The oil minister even suggested that South Sudan would be contented to sit on the sidelines of OPEC, not taking part in any vote for any OPEC policy change.

The oil minister also mentioned that stable oil prices, an opportunity that OPEC offers member countries, would favour his country as South Sudan also needs to meet the internal need for oil demand from its citizens. Joining OPEC would help them meet this demand as OPEC is in charge of regulating oil prices and has been to help African countries, in particular through its oil production cuts policy. This might be the beginning of a booming economy for South Sudan.

References

1. ^{^} Toma South blocks 1, 2 and 4 (www.vanguardngr.com)
2. ^{^} In an interview with Aljazeera (www.aljazeera.com)
3. ^{^} Nigeria currently produces 2.53 million barrels per day while Angola has a turnover of about 1.69 million barrels per day (www.hotvibesmedia.com.ng)