IMF Sees South Sudan’s 2019 Oil Output Rising as Wells Reopen

SOUTH SUDAN (Capital Markets in Africa) – South Sudan’s oil production will increase by the end of the year as wells reopen in Africa’s youngest country following a truce to end a five-year war, the International Monetary Fund said.

The government and rebel leaders signed a peace accord in September as they sought to end a war that had raged since 2013. The conflict more than halved the country’s oil production to about 120,000 barrels per day, down from 350,000 barrels at South Sudan’s independence in 2011. Since signing the deal, oil production has risen to 145,000 barrels a day, according to the IMF.

“There are ongoing investments to reopen more oil wells in the fields that have not been producing because of the war and it is anticipated that production could increase further, possibly by another 25,000 barrels per day, possibly by the end of the year,” Jan Mikkelsen, the IMF mission chief for South Sudan, said in a phone interview on Tuesday.

The IMF has also called on the nation to stop engaging in oil advances, saying this is both expensive and opaque for the crude-dependent nation. The practice typically involves taking substantive short-term loans, typically two to three months long, from oil companies or the oil traders who are paid in kind. The IMF estimates that 87 percent of South Sudan’s budget is funded from oil revenues.

“It complicates management of the budget, because it is difficult to anticipate the exact revenues that come to the budget after repayment of advances,” Mikkelsen said, adding that the advances are expensive in terms of fees and interest payments.

Source: Bloomberg Business News