South Sudan invites new international investment into oil sector

London (Platts)--10Feb2014/826 am EST/1326 GMT


South Sudan is keen to welcome increased international investment into its oil sector, foreign minister Barnaba Marial Benjamin said Monday, declaring the country safer than, among others, Iraq and Afghanistan.

Benjamin, speaking at London's Royal Institute of International Affairs, also said Juba was working with the governments of the US, UK and Norway on ways to reform key institutions in South Sudan and increase security in the country, which has been hit in recent months by intense fighting following a failed coup d'etat in December.

"South Sudan is full of resources and we need investment to come in so resources can be exploited for the benefit of all the people of South Sudan," Benjamin said.

"The US, UK and Norway are helping us put down security in the region and helping us with the issue of inviting investment," he said.

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South Sudan suffered the attempted coup d'etat on December 15, which Benjamin described as part of a wider "power struggle" between the government and a rebel group led by former vice president Riek Machar.

It led to intense fighting across South Sudan, and impacted on the country's estimated 250,000 b/d of oil production.

At least 50,000 b/d of output was shut in in Unity State as rebels took control of some key oil fields.

It also saw workers from international oil companies, such as China's CNPC, Malaysia's Petronas and India's ONGC Videsh Ltd, flee the country as fighters targeted oil fields.

Despite the violence, which has continued regardless of an agreement in mid-January to cease hostilities, Benjamin said he was optimistic of a resolution to the country's political crisis.

"We have a crisis, but we will resolve it," he said. "The way forward is very clear -- reconciliation and reform."

SUDAN RELATIONS

South Sudan, which only became an independent country in 2011, had only just resolved an 18-month dispute with northern neighbor Sudan over oil transit when the coup d'etat was attempted.

Juba shut in all of its oil production -- then estimated at some 350,000 b/d -- for 18 months from January 2012 because of the row, which erupted when Sudan demanded much higher fees for transiting South Sudanese crude to Port Sudan on Sudan's Red Sea coast for export.

The row badly affected the economies of both countries, in particular South Sudan, which relies on oil revenue for 98% of its budget.

Benjamin said relations now with its northern neighbor were much improved.

"We've had a rocky relationship with Sudan," he said. "But we are trying to get married again."

At the same time, Benjamin said a lot of countries surrounding South Sudan were in turmoil -- including Sudan.

"Sudan is in turmoil, there is no question about that," he said. Sudan produces some 150,000 b/d of crude oil, including from areas that straddle the border with its southern neighbor.

Benjamin also pointed to major problems in the Central African Republic and Somalia, saying Juba was, by comparison, safe.

--Stuart Elliott, stuart.elliott@platts.com
--Edited by Jeremy Lovell, jeremy.lovell@platts.com

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