South Sudan Sees Pre-War Oil Output Unlikely as Wells Decline

(Bloomberg) -- South Sudan faces difficulty in reaching more than 300,000 barrels a day of oil production it once pumped, due to declining fields, according to an official.

With current production sustained at about 165,000 barrels a day, the government has downgraded expectations of returning to record output before a civil war broke out in 2013. It's now focused on a planned licensing round to bring in new investment.

“It is not easy for us to go back” to previous levels because of geological challenges, said Awow Daniel Chuang, undersecretary in the ministry of petroleum. “We understand there is a natural decline, this oil reserve is limited.”

The country has called for an environmental audit to investigate pollution that happened amid the war that claimed more than 400,000 lives and crushed the economy. The contamination is suspected to be linked to the increasing number of infants born with deformities in crude-producing regions.

Additional challenges have emerged for the country, including the coronavirus that's curbed revenue and a devastated agricultural sector heightening the risk of famine.

Production at oil wells may also be slowed by flooding, while protests at the northern neighbor's seaports, which South Sudan uses to export its crude, may affect shipments. Chuang said he isn't aware of any interruptions in the north.

The government is collecting data on 14 blocks that it plans to offer in a licensing round for new bidders, probably in the first quarter of 2021.

“There is a very big potential to discover more oil in other areas across South Sudan,” Chuang said. “We need to replenish our reserves.”

©2020 Bloomberg L.P.