Financially desperate South Sudan renews Oil contracts, expects to resume production in two months

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South Sudan announced renewal of oil contracts with China’s National Petroleum Corporation and Malaysia’s Petronas for five more years.

Petroleum Minister Ezekiel Lul Gatkuoth said Friday: “We have renewed the oil contracts for five years; the system is being updated to promote exploration and development, and to support oil production in the country.”

The agreement also provides for an extension of the contract till 2022 for the Paloch and Unity oil fields. The production from the two oil blocks is also expected to increase, Gatkuoth said.

“With this package now signed, we will now be moving forward with oil production, especially in places that were shut down,” he said.

Gatkuoth’s announcement come following revelation by South Sudan diplomat in Abu Dhabi that the nation is capitalizing on the surge in oil prices to double production and generate revenue for the starved sectors.

Mayom Alier, said: “We are planning to increase oil production as oil prices go up to increase our revenue and expand the ways of oil industry,” without giving a specific figure to what extent output is expected to rise. He however said they are trying to reach the levels of 500,000 barrels per day which the country was producing when the conflict began in 2013.

South Sudan has pledged to increase its oil production from 130,000 to 350,000 barrels a day despite the ongoing armed conflict.

The renewal of the contracts will boost production in oil fields that had been shut down because of fighting, Gatkuoth said at the signing ceremony in the capital Juba.

A three-year armed conflict pitting President Salva Kiir against rebel leader Riek Machar has slashed oil output in one of the world’s most oil-dependent economies.

The conflict has killed tens of thousands and displaced about 3 million people. The formation of a unity government in April did not stop the fighting.