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OPEC Cuts, Oil Price Drop Delay South Sudan Plans to Lift Output

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South Sudan is banking on a better year in 2021 after efforts to rebuild its oil industry were knocked by the coronavirus and a collapse in crude prices.“We experienced prices that had never been there before and we are running at a loss” along with private operators, Awow Daniel Chuang, the undersecretary in the Ministry of Petroleum, said in an interview in Juba, the capital. “We have been affected much more than others because South Sudan, being a new country just emerging from war, has a lot of challenges.”South Sudan’s official oil production dropped 20,000 barrels to 170,000 barrels a day as lockdowns to control the pandemic delay the moving of production equipment and materials. The commodity is the landlocked, East African nation’s only major export and its success is crucial to an economy shattered by five years of conflict.

Plans to boost output have also been delayed because the nation is an OPEC+ participant that’s expected to contribute to the cartel’s wider supply-cut effort.“We have been getting pressure from OPEC and, of course, we understand the background of this and we are working also to balance our needs, and at the same time cooperate,” Chuang said. “We are always making sure that we cooperate with OPEC so that we control the supply.”

The country that gained independence from Sudan less than a decade ago pays fees to its northern neighbor to get its oil to ports. It has negotiated to defer $6 a barrel of the $24.10 a barrel it costs to ship the crude, Chuang said.

“It’s like a loan and when the prices improve, we will pay all,” Chuang said.South Sudan pumped 350,000 barrels a day before war broke out in 2013 and had targeted this year to boost activity through a licensing round, and exploration by private companies and an investment from South Africa. The bidding round will probably be deferred to the first quarter of 2021.

Easing Lockdown

China Petroleum Corp., Petroliam Nasional Bhd. and Oil & Natural Gas Corp. of India are among companies operating in the country.An easing of coronavirus lockdowns is starting to allow oil workers back to the region, Chuang said.

The government will resume the selection of a company to conduct an environmental audit of fields that were polluted when production was unregulated, and is in communication with the companies that have planned exploration.

“There are a lot of uncertainties, but if they can resume by next year it will be fine,” he said.

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