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South Sudan Rebels Urge Oil Shutdown After Seizing State Capital

South Sudanese rebels seized the capital of oil-rich Unity state, demanding companies in government-held territory suspend crude production and evacuate staff within a week.

Rebels allied with former Vice President Riek Machar took control of Bentiu today after battling government forces, Lul Ruai Koang, a spokesman for the insurgents, said in an e-mailed statement. South Sudan’s Defense Minister, Kuol Manyang Juuk, said rebels had “dislodged” government troops in the town.

The insurgents urge “all oil companies still operating in government controlled areas to immediately embark on gradual and voluntary closure of oil production,” Koang said. “Failure to comply with this request, the oil companies risk forced oil shutdown and the safety of their staff.”

South Sudan’s oil output has fallen by about a third since fighting erupted on Dec. 15 between factions loyal to President Salva Kiir and his former deputy Machar. The country is currently producing about 160,000 barrels per day from Upper Nile, the only state still pumping crude.

Violence has left thousands of people dead and forced more than a million to flee their homes, according to the United Nations. Machar in a March 27 interview vowed to seize oil fields in Upper Nile in a bid to starve the military of revenue.

“The recapturing of Bentiu marks the first phase of liberation of oil fields” controlled by the government, Koang said in the statement.

About 4,000 people have arrived at the UN’s base in Bentiu over the past two days, seeking shelter from fighting, Joseph Contreras, acting spokesman for the UN peacekeeping mission to the country, said today from the national capital, Juba.

Output Suspended

Oil production in Unity state, estimated at about 50,000 barrels per day before it was suspended in December, is due to resume by July, the Petroleum Ministry said last week. A 3,000 barrel-a-day diesel refinery is due to be inaugurated near Bentiu at the same time.

Rebels attacked a refinery north of Bentiu yesterday, wounding foreign employees, Defense Minister Juuk said by phone from Juba. UN peacekeepers evacuated 10 workers from the Russian company Safinat, five of whom had sustained injuries, Contreras said.

“They damaged one of the crude oil tankers and they took a car,” Juuk said. The army has regained control of the facility and will retake Bentiu town from the insurgents, he said.

China National Petroleum Corp., India’s Oil & Natural Gas Corp. (ONGC) and Petroliam Nasional Bhd., are the main producers of South Sudan’s oil.

To contact the reporters on this story: Mading Ngor in Juba at mngor@bloomberg.net; William Davison in Addis Ababa at wdavison3@bloomberg.net

To contact the editors responsible for this story: Paul Richardson at pmrichardson@bloomberg.net Michael Gunn, Karl Maier

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