Photograph — savedarfur.org

South Sudan has made a new oil discovery in its northeastern Upper Nile State, the first since its independence in 2011 when exploration was interrupted by war and conflict. The discovery was made by a consortium led by China’s CNPC. CNPC dominates South Sudan’s oil industry, running Dar Petroleum Operating Company (DPOC) and Greater Petroleum Operating Company (GPOC), both of which are producing all the country’s oil.

Reuters reports that the new field contains 5.3 million barrels of recoverable oil and will be linked to the nearby Paloch oilfields, operated by DPOC. “Production is likely to begin towards the end of the year,” Minister of Petroleum, Awow Daniel Chuang told a news conference. He also said exploration will be taken as a priority in the hope of further discoveries as there are more wells under review.

South Sudan is the most oil-dependent country in the world; oil revenue accounts for 98 percent of the country’s budget and around 60 percent of its GDP, according to the World Bank. War and conflict deeply affected its economy as oil production was suspended over a dispute with Sudan regarding transit fee, and rebel fights with the Sudanese military damaged production facilities, reducing oil production to less than 130,000 barrel per day from pre-war oil production of 350,000 bpd. 

The country only resumed oil production a year ago with 20,000 bpd and has currently improved output to 180,000 bpd with the hopes of reaching and surpassing pre-war levels by the end of 2020. Increased oil productivity is needed to revive the country’s ailing economy as it will enable the government to increase spending towards poverty reduction, and provide services for the Sudanese people.

Money is also needed to consolidate peace between the government and rebel groups, and consequently, attract investors. A peace deal was signed in September 2018, but it remains fragile as both parties continue to fight. Plans to establish a unity government in May failed due to a lack of funding and political will, time constraint, and inability to disarm, train and integrate rebels. 

As part of its efforts to increase production, South Sudan is seeking new export options and new investors in its refining sector. Speaking at a press conference in Juba last month, Chuang said the country’s small refinery is not enough for its population’s entire consumption. He also said that the country is preparing to begin construction of an inland crude pipeline to the main export pipeline which evacuates crude via Port Sudan at the Red sea for export and shipments.

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