South Sudan to Restart Oil Production Soon

KAMPALA, Uganda - South Sudan hopes to restart oil production "within a few days" after more than a year of closure, following a border security deal with former civil war foe Sudan, a company executive told Dow Jones Newswires Wednesday.

A Sudanese government delegation is expected in Juba, South Sudan's capital on Thursday, to prepare for the finalization of the paperwork required for the resumption of crude pumping, from the South's oil fields, through pipelines and ports that straddle the north, Paul Adong Deng, managing director of state oil company, Nile Petroleum Corp. said.

The resumption of crude production and shipments is critical for both economies, which have been struggling under the burden of a host of economic hardships.

"Once the paperwork is finalized, oil production will start immediately, the facilities are ready," Mr. Deng said, adding that production would start with a few oil fields, before gradually being extended to the country's entire oil blocks, in Upper Nile and Unity states.

The country is expected to initially start pumping around 30,000-40,000 barrels a day of crude as early as next week, before reaching a pre-independence capacity of around 350,000 barrels a day within two months, Mr. Deng added. Analysts expect the country's crude to reach global oil markets by next month.

Preparations to resume oil production have been ongoing for some time, back in early March a top official at South Sudan's national oil company also said oil exports were expected to reach the international market by May after South Sudan and Sudan signed an agreement signaling their commitment to resuming crude-oil shipments from the South through Sudanese pipelines.

Sudanese President Omar al Bashir is expected to visit Juba later this week for the first time in nearly two years, to endorse the oil deal, according to the Sudanese presidency.

Earlier this month, Sudan and South Sudan agreed to pull their troops from contested oil-rich regions along their 1,120-mile poorly marked border, to create a 12-mile demilitarized zone, a condition for the resumption of crude shipments. South Sudan separated from Sudan in July 2011 after two decades of war, retaining around 75% of the oil fields.

Last week, global economic trader, Trafigura announced that it had signed fuel supply deal with South Sudan for the supply of Dar Blend crude oil through Port Sudan.

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