Ongoing conflict stifles South Sudan’s oil sector

According to Jonathan Markham, GlobalData's Analyst covering upstream oil and gas, continued armed fighting, trade disputes and low oil prices are negatively impacting South Sudan’s oil industry. As a result, asset holders are reducing investments and potential investors being deterred by instability in the region.

Reported production thought to have decreased

At the end of 2013, reported production in South Sudan was approximately 240 000 bpd. However, this was prior to the start of the conflict. The 2013 figure is thought to have fallen to around 165 000 bpd in 2014, a decrease of around 75 000 bpd since the conflict began.

With the current oil price of US$60-65/bbl, South Sudan earns around US$100 million in profit each month from oil exports. This sum accounts for approximately 90% of the government’s income. It is, however, likely that 2015 production will decrease further due the conflict escalation around the oil regions.

South Sudan relies on two Sudanese pipelines to export crude oil and has no other export routes. This has exacerbated the situation, as whilst the government has investigated the possibility of building new pipelines, its plans have not progressed due to this ongoing conflict.

Damage to infrastructure will set South Sudan back at least seven years

Markham comments: “Neither government nor rebel forces are in full control of the locations in key oil regions. Ineffective ceasefire agreements and declining oil exports mean operations in South Sudan will continue to be affected in the short to medium term. Damage to infrastructure will set the country back at least seven years, with production not expected to return to 2013 levels, of approximately 240 000 bpd, until 2020.” He continues: “Despite proven reserves of 3.5 billion bbls and potential for further exploration, oil companies are not willing to invest until the political and security situation in South Sudan improves.”

Adapted from press release by David Bizley

Read the article online at: https://www.oilfieldtechnology.com/drilling-and-production/07072015/ongoing-conflict-stifles-south-sudans-oil-sector/