Wednesday December 13, 2017

Oil Pipeline can be shut down anytime soon – Ministry warns

JUBA – The Ministry of Petroleum and Mining has warned that it may turn off the pipeline and close down the oilfields in Paloch if Sudan refuses to lower the transit fees. The warning comes on Friday when the Ministry sent out a detailed letter directed at the Petroleum Ministry in Khartoum to consider lowering the transit fees as a result of the recent changes in oil prices.
Last week, OPEC (The world’s petroleum administrative body) announced that prices of oil had fall to $29 dollars a barrel. A significant drop that put oil-dependent South Sudan in serious jeopardy.
The ministry however bowed to keep the oil on the ground if no compromise is reached.
“We are left with no option at the moment rather than to shut it down because its not feasable. We cannot sell the oil at loss” – an internal Memo at the Ministry of Petroleum and Mining reads.
South Sudan pays Khartoum $25 per barrel for oil transported through her territory. A percentage of these amount is as well allocated to Chinese Pipelines rental.
These fees were negotiated to cover the debt of $3 billion dollars agreed by the two countries previously to allow South Sudan breakaway.
South Sudan is currently producing oil at 160,000 bpd (barrels per day). The production was forced to drop because of the ongoing civil war in the country.
With the price of crude oil dropping to $29 dollars per barrel, South Sudan is ending up getting $4 dollars per barrel. When administrative and services fees are factored in, South Sudan can end up in a yearly debt, a situation the Ministry of petroleum wish to avert through lowering of fees.
Times Wire Staff
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