South Sudan's oil output is on track to be more than halved as it moves toward a full shutdown, an official said on Wednesday, one day after the country signed a deal to build a new export pipeline through Kenya rather than its old civil war foe Sudan. Landlocked South Sudan - which seceded from Sudan last July under a 2005 peace accord - has long sought an export route through East Africa but analysts say the project faces security and financial challenges that could prove difficult to overcome.
The announcement of the pipeline agreement late on Tuesday comes amid an increasingly bitter row with Sudan over how much South Sudan should pay to use Khartoum's pipeline and Red Sea port which the new nation depends on to export its oil. Sudan began confiscating some oil exports from South Sudan this month to make up for what it called unpaid transit fees. On January 20, Juba said it would shut down its output of roughly 350,000 barrels per day (bpd) within two weeks.
"The government of South Sudan is making good progress with the shutdown of all oil wells in its producing fields," South Sudan's top negotiator Pagan Amum told reporters in Addis Ababa, where the two sides are meeting for talks. All 55 wells in Block 5A, operated by the White Nile Petroleum Operating Company, as well as all 274 wells in Blocks 1, 2 and 4 have been fully shut down, and the shutdown of other wells was going smoothly, Amum added.
More than 600 wells in Blocks 3 and 7 had reached a "reduced production stage," he said. Amum said South Sudan would resume production if Sudan immediately paid the value of "stolen or confiscated" oil at the sales price contracted to purchasers, agreed not to block vessels coming to load oil, and met other conditions.
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