South Sudan sees oil output resuming in December - Reuters Africa

By Mading Ngor

JUBA (Reuters) - South Sudan expects to restart some oil output in December and more after June next year, an official said on Tuesday, after the new country struck an interim deal with Sudan that would allow it to resume crude exports across Sudanese territory.

South Sudan seceded a year ago under a 2005 deal that ended decades of civil war, but the two have been embroiled in disputes including one over how much landlocked South Sudan should pay to export oil through Sudan.

The South halted its output of about 350,000 barrels per day in January as a result of the dispute, erasing the source of 98 percent of its state revenues and causing the government to impose tough austerity measures to weather the shutdown.

Under international pressure to make a deal and shore up their faltering economies, the two countries reached an agreement on fees this month, but Sudan has said it wants a border security agreement before oil flows resume.

The two sides are expected to resume talks in Addis Ababa on Sunday.

Oil output would not restart immediately even after a final deal, South Sudan Deputy Finance Minister Marial Awou Yol told reporters.

"Even when the deal is signed, it will take months to repair damage to production equipment, for the oil companies to rehire and reassign staff, for the pipelines to be flushed of water and refilled with oil, and for the first tankers to be loaded and then payment made," he said.

"The Ministry of Petroleum and Mining expects production of Dar Blend to begin in December, with the first payments possibly received in January. Production of Nile Blend is not expected to resume before June of 2013," Yol said.   Continued...