GLOBAL-Crisis, oil prices shoot-up
By Tereza Jeremiah Chuei
The Vice President for Economic Cluster and Chairman of the ad hoc Economic Crisis Management Committee, Dr. James Wani Igga has said that the country expected an ‘economic boom” this year due to the recent rise of oil prices as a result of the Ukraine war, and the completion of payment of oil dues owed to Sudan.
Dr.Iggamade the remark yesterday at the opening of a two-day workshop that aimed at enriching the policies of the government to induce fast economic growth in the country.
He revealed that Juba had completed payment of US dollars three billion Transitional Financial Arrangement (TFA) to Khartoum entered under the terms of Corporation Agreement signed by both nations in 2012.
“The good news from the Oil fields is that we have alas, by end of last January 2022 finalized payment of over US dollars three billion TFA, and now we shall be getting nearly USD 12 million monthly from the Khartoum Government being the cost of crude oil diverted by Sudan for running their generators inJeili and Kosti and that the relief for the USD three billion reinforced with the aforementioned monthly payment will by far boosting the economy, “he said.
Igga added that the sky rocking of the oil prices was an excellent tide for producing countries like South Sudan.
“We are saddened by the war in Ukraine, that would have been certainly avoided if diplomacy were exhausted, nonetheless, the sky-rocking of oil prices is excellent tidings for oil-producing countries. By all standards, what remains of South Sudan is good supervision and management,” he added.
The country is currently producing around 170,000 barrels per day almost 20,000 barrels less than what it was pumping earlier in the year.
South Sudan is also a member of the OPEC coalition, which is currently in the midst of a 7.6 million barrels a day production cut deal and had committed to cut output to 100,000 barrels for May, June and July, while for August onward, it agreed to produce 106,000 barrels from its reference level of 130,000.
Undersecretary of the Ministry of Petroleum, Awow Daniel Chuang had previously said that relations between South Sudan and Sudan have improved and the government hoped to complete payments to Sudan under the transitional financial arrangement (TFA) by 2021, after which it would be in a position to renegotiate better terms.
South Sudan relies on Sudan to export its crude via a pipeline through Khartoum to the Red Sea.
There are four fees that South Sudan pays for every barrel produced. A transportation fee, a processing fee, a transit fee, and the non-commercial tariff, the TFA.
The first three are commercial fees which have a major impact on the economy and the oil industry, particularly the political TFA fee as it amounts to USD15 per barrel. While the three commercial fees combined are between USD nine and USD11 respectively.
Meanwhile, South Sudan is keen to restore output from its oilfield, Block 5A. The country also hoped to raise its oil production output from 170,000-172,000 barrels per day (bpd) to 250,000 bpd by 2021.
Blocks 3 and 7 in Great Upper Nile is operated by Dar Petroleum Operating Company, and they are producing around 130,000 bpd, which sometimes drops due to logistic and other challenges.
In Blocks 1, 2, and 4, the country is producing around 52,000 bpd at the moment, which is projected to be around 60,000 bpd.