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Peace deal in South Sudan adds crude to market

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World Pipelines,

As the market eagerly awaits an OPEC+ deal, non-OPEC producers continue to make gains. Sudan and South Sudan are likely to raise crude oil production in 2019, according to ESAI Energy’s recently published Africa Watch. A peace deal in September halted South Sudan’s five year civil war between forces loyal to President Salva Kiir and others backing Vice President Riek Machar. The peace deal has, for now, stopped fighting that has decimated Sudan and South Sudan’s crude production since the latter’s independence in 2011.

The two countries should be able to raise crude oil output from a combined 230 000 bpd today to approximately 300 000 bpd in 2019. Relatively quick production gains will be possible at South Sudan’s license areas 1, 2 and 4 in Unity state, near the border with Sudan. These Indian- and Chinese-operated areas were shut in during the civil war and have a combined capacity of 120 000 bpd. Meanwhile, Sudan hopes to raise output at its only producing area, also on the border with the South, after years of underinvestment before US sanctions were lifted in 2017.

“The governments’ ambitions to double output in 2019 are unrealistic, and the failure of many previous agreements shows that peace is fragile in South Sudan,” explains Amrit Naresh at ESAI Energy. “But crude production in the two countries should rise as long as security conditions continue to improve.”

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