South Sudan to restart oil production to shore up economy

South Sudan hopes to resume oil production at the Tharjath oil field in Unity State halted by the more than two years civil conflict, officials said on Thursday.

The conflict dwindled oil production capacity to below 130,000 barrels a day from 350,000 bpd in its only functioning Paloch oil field of Upper Nile state.

Petroleum Minister Dak Duop Bichok told Xinhua in Juba that the extent of damage caused by conflict on oil fields and production was immense and that oil companies with concessional rights to these ransacked oil blocks have agreed to commence repair work on them.

"We told the oil companies to repair the oil fields within 4-6 months so that we resume the work and they proposed 8 months to a year," Bichok revealed.

The resumption of crude production and shipments is critical for the South Sudan economy which has been struggling under the burden of a host of economic hardships.

"The damage caused to the block 5 in Tharjath Oil field, Unity state requires immense repair work on it to resume production. The ministry had a meeting with oil companies and they are agreed to resume production," he revealed.

Bichok disclosed the companies demand security and renegotiation of their five contracts that were disrupted by the more than two years civil conflict that broke out in December 2013.

"The companies demand renegotiation of their five year contracts that will soon end this year as guarantee for them to resume oil production. They say they want 10 years guarantee which we have not yet agreed upon," the minister explained.

Bichok added that the companies also demand compensation stemming from the 2012 oil shutdown over oil pipeline transit fees dispute with Sudan which led them to incur extra costs of maintaining the oil that was in transit to Port Sudan.

"We agreed but gave them some conditions to build a tarmac road from Bentiu to Adok Bhar, schools and hospitals and also they should improve on their technology in the oil fields to protect the environment," he said.

South Sudan under the signed 2012 cooperation agreement with Sudan agreed to pay about 20 U.S. dollars per barrel as pipeline transit fees to Sudan.

"We will also go and negotiate with Khartoum, they are now in need, they said we can now reach consensus and we will agree on it. The former minister started negotiating with them and we will follow what they agreed and what they disagreed," he said.

South Sudan depends on oil exports to finance 98 percent of its fiscal budget. China National Petroleum Company, Malaysia's Petroliam National Bhd, India's Oil & Natural Gas Corp. produce the bulk of South Sudan's crude oil. Endit