South Sudan to resume oil output

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South Sudan's Upper Nile oilfields may take up to half a year to resume production after the government signs a final deal on export fees with Sudan, South Sudan's oil minister said on Thursday.

Getting crude flowing again from the Unity oilfields may take up to a year, he said, adding that facilities needed repairs and renovation after they were damaged during border fighting with Sudan earlier this year.

Landlocked South Sudan, which seceded from Sudan last year, shut down its production of roughly 350,000 barrels per day in January during a row with Khartoum over how much it should pay to pipe crude through Sudan for export.

“For blocks 3 and 7 in Upper Nile, the resumption will be within four and six months ... for the Unity oilfields, it will take from 10 to 12 months,” South Sudan Oil Minister Stephen Dhieu Dau told reporters.

South Sudan had initially hoped to resume production in December.

Block 3 and 7 contributed 250,000 bpd until the shutdown, according to analysts.

The two sides reached an interim agreement on fees this month, but the final deal has not yet been signed. Oil is the lifeline for both economies.

Dau said he expected the government to sign a final agreement by Sept. 22, a deadline set by the U.N. Security Council.

“Because we've agreed and with the facilitation of the international community and the African Union, we're confident that the oil production will resume,” he said. “The internal and technical arrangements are also taking place.”

Dau said two mini-refineries the country was working on in the states of Upper Nile and Unity would meet domestic consumption by June 2013.

South Sudan's President Salva Kiir signed the new petroleum act governing the oil industry into law in July, Dau said.

The act makes oil companies responsible for maintaining health, safety and environmental standards which the ministry will monitor, he said.

It will also help ensure information about the oil industry is widely available, Dau added. “This transparent approach will ... work to reduce vulnerability for bribery by making corrupt practices more difficult than even before.”

South Sudan voted overwhelmingly to secede in a 2011 referendum promised in a 2005 peace deal, which ended decades of civil war between north and south.

The new nation was left severely underdeveloped by the long conflict and before the shutdown depended on oil for about 98 percent of its state revenues. - Reuters


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