South Sudan to start producing diesel at mini-refinery by year-end

JUBA (Reuters) - South Sudan will launch its first small oil refinery in December to produce diesel as it seeks to lower dependency on petroleum product imports, a senior oil official said on Thursday.

South Sudan, one of the world's least developed countries, took three-quarters of Sudan's oil production when it became independent in 2011 but has no refineries and needs to import petrol from Sudan or East African neighbours.

The landlocked nation also needs to export its crude through a Sudanese port but it plans to build an alternative pipeline either to Kenya or Djibouti via Ethiopia.

In a first step toward ending its foreign dependency, South Sudan signed a deal last year with a Russian firm to build a mini-refinery with a capacity of at least 5,000 barrels per day in Bentiu in Unity state.

Much of the petrol consumed in the state, which is home to several oilfields, is smuggled in at a premium from neighbouring Sudan. Southern areas depend on imports from Kenya and Uganda.

Work at the Bentiu refinery has been delayed due to difficulties getting equipment into a country with few good roads but is progressing, said Paul Adong, managing director at state-oil firm Nile Petroleum Corporation.

"Some equipment that is on site is being erected. Some is on the way to the site. The whole equipment is in the country," he told a news conference.

Work on the refinery originally had been set to begin in July.

Adong said the refined products would lower diesel prices by 30 percent in some areas.

For 2014, South Sudan plans a second mini refinery, built by U.S. firm Ventech Engineers International in Thangrial in Upper Nile State. It will have an initial capacity of 10,000 bpd, officials have said.

Adong said the country's oil production would average 200,000 bpd in coming months as tensions with Sudan have eased. It currently pumps 190,000 bpd, Oil Minister Stephen Dhieu Dau said on Tuesday.

"Now there is a stability of flow and there are no disputes with the north (Sudan) we will scale up the production," Adong said.