The Oil Ministry in South Sudan has said that oil production in the country is rapidly declining and long-term output will not attain half of the 2010 peak levels even though all the oil fields are operational.

The Oil Ministry noted that although the country has advanced oil reserves in Upper Nile and Unity states, only the fields in the Upper Nile are on stream as a result of the insecurity in Unity state. Even though the Unity fields commences production in 2016, oil output will not less than 175 thousand bpd, lower than its yearly average of 360 thousand bpd in 2009.

According to Radio Tamazuj, production in the country will then fall to below 100 thousand bpd by 2021 and below 50 thousand bpd by 2026, if new reserves are not found and developed.

Regardless of the fall in production, South Sudan has to pay Sudan $2 billion out of the overall $3 billion it said it would transfer to Sudan in return for the transport of its oil via a pipeline to Port Sudan on the Red Sea.

Apart from transit, transport, and processing fees, South Sudan also decided to pay additional $15 a barrel to Sudan under the oil transit agreement between Sudan and South Sudan (which will expire in  December 2016), equaling an overall sum of $3.028 billion.

South Sudan depend solely on its oil exports for hard currency, which is essential in import goods, thereby making South Sudan to begin paying Sudan in oil transfers rather than cash.

Anita Fatunji