South Sudan resumes pumping 20,000 bpd from oilfield suspended since 2013

South Sudan’s Minister of Petroleum, Ezekiel Lol Gatkuoth, turns a spigot at an oil well at the Toma South oil field to Heglig, in Ruweng State, South Sudan August 25, 2018. (Reuters)
Updated 27 August 2018
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South Sudan resumes pumping 20,000 bpd from oilfield suspended since 2013

  • Production at five of the previously suspended oilfields was expected to reach 80,000 bpd after maintenance work is completed
  • South Sudan’s oil is shipped to international markets via a pipeline through Sudan

KHARTOUM: South Sudan has resumed pumping 20,000 barrels per day (bpd) of crude from the Toma South oilfield, where production had been suspended since 2013, the Sudanese oil minister Azhari Abdulqader said. Production at five of the previously suspended oilfields was expected to reach 80,000 bpd after maintenance work is completed by the end of the year, Abdulqader told a news conference in Khartoum.
South Sudan’s oil output currently stands at 130,000 bpd and is expected to reach 210,000 bpd by year-end, he added.
South Sudan seceded from Sudan in 2011 when output peaked at 350,000 bpd but two years later plunged into civil war. At the time fighting started, production was at about 245,000 barrels per day.
The conflict has killed tens of thousands, displaced an estimated quarter of South Sudan’s population of 12 million and ruined its economy that heavily relies on crude oil production.
South Sudan’s oil is shipped to international markets via a pipeline through Sudan.
The area in which Toma South oilfields lie saw the most intense fighting between rebels and government troops, damaging oil production facilities.
During a visit on Saturday to Toma South, some 20 miles to the border with Sudan, Ezekiel Lol Gatkuoth, South Sudan’s Oil Minister, said the resumption of production in blocks 1, 2 and 4, will bring an additional output of 45,000 barrels per day.
He said the operator of the fields, Greater Nile Petroleum Operation Company, and staff from his ministry were working to ensure full production.
“They will be here in Toma South working seven days a week, 24 hours a day to make sure that the production is not interrupted and also to make sure the central processing facility is operational,” Gatkuoth said.
The return to production and pumping is part of a cease fire and power-sharing agreement that was reached earlier this month when President Salva Kiir, rebel leader Riek Machar and other rebel groups signed a peace deal meant to end the civil war. “I can tell everyone, the production can be more if peace is there and if we are determined to nourished it,” Abdulqader said.


Iran looms large over OPEC summit

Updated 22 September 2018
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Iran looms large over OPEC summit

  • Saudi Arabia only country in Mideast, and perhaps world, with enough capacity to keep market supplied, say experts
  • At Algiers, Opec and leading non-Opec countries are expected to discuss how to allocate supply increases to offset a shortage of Iran supplies

LONDON: The Opec summit in Algiers on Sunday meets amid widespread fears of a supply crunch when a forecast 1.4 million barrels a day of crude is lost from Iran in November when US sanctions kick in.
If, on top of that, more supply shocks hit the market in worse-than-expected disruption from Libya and Iraq, the price of crude could surge, said Andy Critchlow, head of energy news at S&P Global Platts. “At the moment, the market looks finely balanced,” he said.
There isn’t a lot of slack in the system. As Critchlow points out: “Upstream investment in infrastructure and new wells is historically low and it will take a long time to turn that around.”
At Algiers, Opec and leading non-Opec countries are expected to discuss how to allocate supply increases to offset a shortage of Iran supplies. The gathering comes after a tweet by President Trump on Sept. 20 calling on Opec to lower prices. He said on Twitter that “they would not be safe for very long without us, and yet they continue to push for a higher and higher oil price.”
Critchlow reckoned KSA still had spare capacity of about 2 million bpd. And KSA would get oil back as they go into winter as it had needed 800,000m bpd merely to generate electricity for the home market to meet heightened demand for air conditioning in the summer.
But there is uncertainty about what will come out of Algiers. For a start, the Iranians say they will not attend. That could be tricky in terms of an Opec communique at the end of the meeting as statements need unanimous support from member nations. And Iran has indicated it will veto any move that would affect Iran’s position, ie, one where other countries absorb its market share as sanctions bite.
Jason Gammel, energy analyst at London broker Jefferies, said: “The magnitude of the drop in Iranian exports is likely to be higher than any hit in demand as a result of problems linked to emerging market currencies, or trade wars. That’s why we expect oil prices to continue to strengthen. The Saudis and their partners will keep the market well supplied, and I think the issue is that the level of spare capacity in the system will be extremely low. Any threat or interruption will mean price spikes. Possibly by the end of the year demand will exceed supply; for now, the market remains in balance, but threats of supply disruption will bring volatility.”
Under the spotlight in Algiers is a production cuts accord forged by Opec and 11 other countries in 2016 which has been extended to the end of this year. The agreement helped reboot prices and obliterate inventory stockpiles that led to the crash in crude prices nearly three years ago. But how long will the agreement last? Algiers may kick that one into the long grass.
Thomson Reuters analysts Ehsan Ul-Haq and Tom Kenison told Arab News: “OPEC members would like to maintain cohesion within the group around supply ahead of Iran sanctions and declining Venezuela production, However, they are expected be in favor of maintaining stability in prices while doing so. On the other hand, they need to find a consensus around how their market share would be affected by a decision to pump more oil in the market. Any decision around production will likely be offset until the November meeting.”
Critchlow said that it is what KSA and Russia say and do that matters. “They speak for a fifth of the global oil market, producing a combined total of 22m bpd.” Together, they are the swing producers when it comes to crude production and supply.
Another factor about Algiers is that it is a meeting of the Joint Ministerial Monitoring Committee, which is not a policy-making forum. Big policy statements may have to wait for the main Opec summit in Vienna at the end of year. That said, there will be some very high-level delegations in Algiers, including the Saudi oil minister and his Russian counterpart.
A statement about the demand picture could emerge, especially as there are fears about the impact on the global economy from the US-China tariff war.
Looking to the future, Critchlow thought the Opec production cuts accord would carry on into 2019. “Oil priced between $70/bbl and $80/bbl is a sweet spot for Middle East producers. Its’s good for Saudi as it helps stop further drainage of their foreign reserves and moves the budget back toward balance. Do they want (the price) to go higher? I think that would cause a lot of political problems for them.”