South Sudan Petroleum Minister calls for end of oil price tussle

By Staff Writer

South Sudan has joined a global campaign to stabilise the turbulent oil market with a call to Saudi Arabia and Russia, the leading producers in the world, to end their fierce rivalry that has seen the price tumble to below SSP7,250 ($25) per barrel.

South Sudan’s diplomatic role in stabilising the oil market was made public last weekend following a teleconference between newly appointed Petroleum Minister Puot Kang and OPEC Secretary General Mohammed Sanusi Barkindo.

The talks were expected to resume towards the end of last week. In the countdown to the resumption of the talks, there was a glimmer of hope as market indices pointed to a marginal rebound as a barrel of crude oil was quoted at SSP2,830 ($27).

Mr Kang expressed support for OPEC and hoped the two crude oil producing giants will soon strike a consensus to reduce the strain the global economy has been forced into by the combined effects of reduced oil production and the rampaging coronavirus pandemic.

In a press sentence distributed by media relations firm APO Group on behalf of Africa Energy Chamber after the teleconference, Mr Kang said the OPEC talks would stabilise the market that has seen the US oil market slump to SSP2,900 ($10) per barrel.

According to the press statement, “While oil prices rebounded last week on hopes of successful negotiations between Saudi Arabia and Russia, they went back down again today (Saturday) following the negotiations delay. Oil prices currently average $25 to $30 (SSP7,250 to SSP8,700) a barrel, maintaining their historic low and hurting producers around the world.”

South Sudan has been part of the OPEC Declaration of Cooperation and OPEC+ for years now and is a consistent supporter of OPEC’s measures to prevent volatility and maintain market stability.

Stability in the petroleum industry is key to South Sudan’s economic wellbeing on the back of formation a government of national unity that brought back President Slave Kiir and First Vice President Riek Machar into government after a six-year standoff.

Because 98 per cent of the economy of South Sudan depends on oil production and revenue, the country is one of the most adversely affected by the current crisis and prices tussle.

According to a 2015 statement by former Petroleum Minister Stephen Dhieu Dau South Sudan’s oil revenue was SSP980 billion ($3.38 billion) from the sale of 36.6 million barrels annually before the fighting that began in December 2013.

Production fell by about a third to an average 160,000 barrels per day since fighting broke out, from 245,000 barrels per day just before the violence erupted.

With the signing and inauguration of the Revitalised Government of National Unity, Juba was expecting a turnaround in its oil industry as peace and inter-communal co-existence become entrenched.

While Saudi Arabia favours increased production, Russia favours reduced production to force the prices to go up.

During talks with Mr Sanusi to try to find an exit out of the current crisis Kang also pledged to join the OPEC negotiations that started last Thursday with the hope of reaching a favourable agreement that will stabilise the market and bring benefits to South Sudan and its oil producing companies.

The statement, circulated by APO Group on behalf of African Energy Chamber quotes the minister as saying, “South Sudan believes that market volatility is negative for every player in the market and hurts our ability to attract new foreign investment, diversify our economy and promote peace.”

“South Sudan is focused on boosting exploration and opening up new oil and gas fields and the current scenario hampers our growth targets significantly,” he added.

In a report, dailyfx.com, an online publication that monitors global crude oil market, pointed to raised optimism as OPEC member-countries prepared for the crunch meeting.

The report said, “This get-together is expected to be more successful than the March conclave. The inability of Saudi Arabia and Russia to agree production cuts in the face of coronavirus linked demand destruction unleashed a bizarre price war and a flood of oil which saw process plummet. A real reduction could be hammered out this time but what could be made to stick could depend on the attitude of the United States, and whether it will cut its oil output. There markets remain, with the department of energy saying this week that the US production is already declining without government action.”

Kang expressed South Sudan’s willingness to work with OPEC and OPEC+ to end the price war in any way possible.

He also welcomed OPEC’s support in the exchange of information and best industry practices on key matters pertaining to local content development, domestic capacity building, technology transfers and oil revenue management.