South Sudan to Raise Oil Output After Striking Deal With Sudan

South Sudan plans to increase crude output by 20 percent to 200,000 barrels a day after reaching an agreement yesterday with Sudan to keep the oil export pipeline open, foreign affairs spokesman Mawien Makol Arik said.

“It’s good news for South Sudan,” Arik said in an interview today in the South Sudanese capital, Juba. “The production of oil is going to go up to 200,000 barrels a day” from a current estimated output of 167,000 barrels, he said.

Sudanese President Umar al-Bashir said he reached an agreement with his South Sudanese counterpart, Salva Kiir, at a summit in Khartoum yesterday to keep southern oil flowing through an export pipeline to Port Sudan on the Red Sea.

The summit was held after al-Bashir threatened to halt shipments of crude through Sudan’s territory on Sept. 6, unless the south withdrew support for rebels opposed to his rule. South Sudan denies backing the fighters and accuses Sudan of deploying troops in its oil-producing Upper Nile region.

“We were able to agree on removing all obstacles hindering relations between both countries through the full commitment to implement all operational agreements,” state-run Sudan News Agency quoted al-Bashir as saying after the talks.

The borders should open later this month, allowing the transit of people and goods on railways, steamers and roads, South Sudanese Foreign Ministry Undersecretary Charles Manyang D’Awol said. A joint security committee is due to meet in Juba by Sept. 17 to resolve any security concerns before the opening of the border, D’Awol said in an interview.

Border Closed

Sudan closed all border points after the secession of the southern region two years ago. Crossings were opened in April and closed again a month later when 11 Sudanese traders were killed by gunmen as they entered South Sudan.

Landlocked South Sudan exports all of its crude via a pipeline through Sudan. A dispute last year between the two countries over exports shut down oil production, which cut the size of South Sudan’s economy by half to $9.34 billion, according to World Bank data. The country has sub-Saharan Africa’s third-biggest oil reserves, after Nigeria and Angola, according to the BP Statistical Review of World Energy.

South Sudan seceded from Sudan in July 2011 and took three-quarters of the formerly united country’s oil output of 490,000 barrels a day. Its low-sulfur crude, which is prized by Japanese buyers for use as clean-burning power-generation fuel, is pumped mainly by China National Petroleum Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp. (ONGC)

South Sudanese Petroleum Minister Stephen Dhieu Dau said the nation has an oil production capacity of 350,000 barrels a day, Khartoum-based Ashorooq TV reported yesterday. The country aims to increase capacity to 1 million barrels a day by developing more fields, and may agree on building a second pipeline to export additional South Sudanese crude through Sudan, he said.

To contact the reporters on this story: Mading Ngor in Juba at mngor@bloomberg.net; Maher Chmaytelli in Dubai at mchmaytelli@bloomberg.net

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net

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