The biggest oil operator in South Sudan to restart exporting in 18 weeks

Reuters , Wednesday 3 Oct 2012

Dar Petroleum Operating Company said its export of crude oil would restart in 18 weeks. It would initially aim for a production of 180,000 barrels per day

 The biggest oil operator in South Sudan, Dar Petroleum Operating Company, said on Wednesday it would take 18 weeks for its crude oil to reach an export terminal once production resumed under deals signed last week with neighbour Sudan.

Landlocked South Sudan signed border and trade agreements at a summit with Sudan that will allow it to resume oil exports through Sudan's pipelines after an eight-month shutdown.

Chinese-Malaysian consortium Dar said it would initially aim for a production of 180,000 barrels per day. Oil would be pumped from its fields in Upper Nile state to Sudan's Red Sea export terminal, Port Sudan.

South Sudan split from Sudan last year under a 2005 peace deal that ended decades of civil war. It inherited three-quarters of the former nation's oil production of 500,000 barrels per day (bpd) - about 350,000 bpd - but export pipelines cross Sudanese territory.

A dispute between the nations over oil fees caused the South to shut down output in January and led to border clashes in April.

Dar's vice president Khalid Marol Riak told Reuters the company would begin flushing hot water through its oil wells, facilities and pipelines as soon as it was given the green light by the Ministry of Petroleum and Mining.

"The crude should arrive at the marine terminal on week 18, four and a half months, assuming that everything remains constant and that the oil facilities are not damaged," Riak said in an interview late on Tuesday.

"It could be three months if we do our best but for everything to be done safely might take longer."

Dar's 601 oil-producing wells in Upper Nile state, near the border with Sudan, pump waxy Dar Blend, a heavy sweet crude with high acidity, that has to be heated throughout the extraction and transportation process.

SANCTIONS LIFTED

Within five to eight weeks Dar will turn on high water cut wells, where the volume of water is more than crude, to help flush out and heat the system, Riak said.

After between nine to eleven weeks the Adar and Gumri oil fields will be switched on, followed by the Palouge field.

"A complete shutdown of production has never happened in history, so it's a challenge to us now, but if we can restart without any damage to facilities, oil spills or gas leaks it will be a great credit to our oil industry," he said.

The United States has imposed economic sanctions on Sudan since 1997 but lifted the penalties for the South when it seceded last year.

"The embargo is over so we have a chance to bring in the best equipment and technology. We will have no excuse not comply with international standards," Riak said.

The oil shutdown caused the Juba government to introduce severe austerity measures, but Riak said the closure had given the country a chance to get better control of its resources and train staff.

Riak said the company would also be more transparent after the government issued a new Petroleum Act. The Ministry of Mining and Petroleum will ask independent parties to conduct audits, including on health and safety and oil production, he said.

"We are prepared to produce daily production figures, anything," Riak said.

South Sudan expelled Dar's former President Liu Yingcai in February, citing lack of co-operation with the South's investigation of oil firms suspected of helping Khartoum seize southern oil. The new president is Sun Xiang Sheng.

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