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South Sudan oil production sharply declines amid serious economic crises

Oct 16, 2020(Nyamilepedia) — South Sudan’s oil production, the backbone of the South Sudanese economy, is battling multipronged challenges that includes global market crises, geological challenges, COVID-19 pandemic and flood, a natural disaster that is severely affecting the Greater Upper Nile region where the oil fields are located.

South Sudan oil minister Awow Daniel (File/Supplied/Nyamilepedia)
South Sudan oil minister Awow Daniel (File/Supplied/Nyamilepedia)

Speaking to Anadolu Agency from the capital Juba, the Undersecretary of the Ministry of Petroleum, Awow Daniel Chuang, regrets that oil production is declining and hopes to increase oil production are fading.

“If we expect any increase, it will not be more than 5-10% maximum. It is not easy for us to go back to the previous 300,000 bpd because of the geological challenges. We understand there is a natural decline and oil reserve is limited,” Said the Undersecretary of the Ministry of Petroleum, Awow Daniel Chuang.

On top of geological challenges and global market crises that have crippled oil prices since 2016, South Sudan floods are covering some of the oil fields which devalue the quality of South Sudan oil that is now more watery.

The floods, according to the undersecretary, are covering the wells and making it harder to extract the oil and also harder to fix the underlying geological challenges that need to be fixed to boost oil production.

“Our production has dropped to 115,000-118,000 bpd in Dar and then in three GPOC blocks it is around 50,000 BPD, which adds up to 165,000 bpd all over the country,” Daniel said.

“Usually these floods will always affect the production because at times when the oilfields are flooded, some wells get covered with water, which affects their production. It is not possible to access to those wells when water is there,” He added.

The Undersecretary said the Ministry of Petroleum is looking for new technologies that may overcome these emerging challenges.

South Sudan depends on oil production as 98% of its GDP comes from oil revenues which has dropped to the lowest from $17.2 billion in 2011 to $2.1 billion this year.

Due to crises in oil sector, the government has not paid public servants for between 5 months to 14 months.

While teachers have been protesting in Jonglei State because they have not been paid their little salaries for 13 months, many embassies overseas closed down after accumulating millions of dollars in debts from rent arrears and staff salaries.

Invited bidders to restore environment

Hon. Awow further revealed that his ministry has invited international companies to conduct environmental audit in response to environmental crises that are being faced by communities that live around the oil fields.

Awow announced that these companies will come to bid and the ministry will select the best ones to restore the environment that has been destroyed by years of poorly regulated oil production.

“They will come and bid and then we will select the best one. These are international companies that will do the environmental audit. We have to get the right company so that we can restore the environment to its initial status,” said the undersecretary.

While South Sudan has depleted many of its wells, Awow said there are 14 more blocks that are currently in their reserve tank.

“We have around 14 blocks other than the areas that we are producing. We are working every day to collect data and then do the mapping, which will help us to open the licensing rounds. The licensing round is to invite new bidders, new players in South Sudan so that we can explore oil in other areas. There is a very big potential to discover more oil in other areas across South Sudan,” Awow said.

On Wednesday president Kiir announced that the government will inject oil revenues into the economy to stabilize the current price inflation; however, with this announcement the economic crises could worsen.

South Sudan pound has been depreciating for months now; however, it reached the lowest level ever this week as dollar was being traded for 82 SSP on Tuesday.

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