South Sudan to return to pre-war oil production levels ‘by 2020’

The country has one of the largest reserves of crude oil in the region. (Reuters)
Updated 11 February 2019

South Sudan to return to pre-war oil production levels ‘by 2020’

  • The world’s youngest country, which split from Sudan in 2011, has one of the largest reserves of crude in sub-Saharan Africa, only a third of which have been explored so far

GREATER NOIDA, India: South Sudan will return to producing more than 350,000 barrels of crude per day by the middle of 2020, up from current levels of just over 140,000 barrels per day (bpd) currently, the country’s oil minister said on Sunday.
Production is expected to rise to 270,000 bpd by the end of 2019, Oil Minister Ezekiel Lul Gatkuoth told Reuters. He was speaking on the sidelines of the Petrotech conference in Greater Noida, a satellite city of India’s capital New Delhi.
The world’s youngest country, which split from Sudan in 2011, has one of the largest reserves of crude in sub-Saharan Africa, only a third of which have been explored so far. The country lost many oilfields to a civil war that broke out two years after its independence. A September peace agreement is largely holding.
“By the end of the year, block 3 and 7 will be hitting 180,000 bpd, blocks 1, 2 and 4 will be producing 70,000 bpd, and block 5A will be producing 20,000 bpd,” Gatkuoth said.
“We used to produce 350,000 to 400,000 bpd. We expect to go back to those levels by the middle of next year,” he said.
South Sudan has signed a preliminary agreement with Russia’s Zarubezhneft for exploring some of the blocks, Gatkuoth said.
“They are interested in block B1, B2, E1 and E2. We will be working to see where they are likely to be interested in the most,” he said.
South Africa, which has committed to investing $1 billion in the country, would collaborate with South Sudan on the construction of pipelines and a new refinery along the border with Ethiopia, the minister said.
“We have agreed to build a refinery on the border of Ethiopia, we have already signed an agreement with Ethiopia to offtake refined products,” Gatkuoth said.
Land-locked South Sudan is looking to boost its export options as it looks beyond its neighbor Sudan, the minister said: “We have new blocks in the southern part of South Sudan, oil from which will be exported to East Africa (through the new pipelines).”
American oil majors such as Exxon Mobil and Chevron showed interest in investing in South Sudan, but are currently not interested because of the conflict, he said.
“We have been approaching Exxon officials, and I will be meeting them in Houston next month,” he said.


Russia vows cooperation with OPEC to keep oil market balanced

Updated 21 November 2019

Russia vows cooperation with OPEC to keep oil market balanced

  • Moscow not aiming to be world’s No.1 crude producer, Putin tells annual investment forum

MOSCOW: President Vladimir Putin said on Wednesday that Russia and the Organization of the Petroleum Exporting Countries (OPEC) have “a common goal” of keeping the oil market balanced and predictable, and Moscow will continue cooperation under the global supply curbs deal.

OPEC meets on Dec. 5 in Vienna, followed by talks with a group of other exporters, including Russia, known as OPEC+.

“Our (common with OPEC) goal is for the market to be balanced, acceptable for producers and consumers and the most important — and I want to underline this — predictable,” Putin told a forum on Wednesday.

In October, Russia cut its oil output to 11.23 million barrels per day (bpd) from 11.25 million bpd in September but it was still higher than a 11.17-11.18 million bpd cap set for Moscow under the existing global deal. Putin told the forum that Russia’s oil production was growing slightly despite the supply curbs deal but Moscow was not aiming to be the world’s No. 1 crude producer. Currently, the US is the world’s top oil producer.

“Russia has a serious impact on the global energy market but the most impact we achieve (is) when working along with other key producers,” he said. “There was a moment not that long ago when Russia was the world’s top oil producer — this is not our goal.”

Russia plans to produce between 556 million and 560 million tons of oil this year (11.17-11.25 million bpd), Energy Minister Alexander Novak said separately on Wednesday, depending on the volume of gas condensate produced during cold months.

Russia will aim to stick to its commitments under the deal in November, Novak told reporters.

Russia includes gas condensate — a side product also known as a “light oil” produced when companies extract natural gas — into its overall oil production statistics, which some other oil producing countries do not do.

As Russia is gradually increasing liquefied natural gas production (LNG), the share of gas condensate it is producing is also growing. Gas condensate now accounts for around 6 percent of Russian oil production.

Novak told reporters that in winter, Russia traditionally produces more gas condensate as it is launching new gas fields in the freezing temperatures.

“We believe that gas condensate should not be taken into account (of overall oil production statistics), as this is an absolutely different area related to gas production and gas supplies,” he said.

Three sources told Reuters on Tuesday that Russia is unlikely to agree to deepen cuts in oil output at a meeting with fellow exporters next month, but could commit to extend existing curbs to support Saudi Arabia.

On Wednesday, Novak declined to say that Russia’s position would be at upcoming OPEC+ meeting. Reuters uses a conversion rate of 7.33 barrels per ton of oil.