May 10, 2018 / 4:31 PM / in 13 days

South Sudan to make last debt payment to Sudan in June

LONDON (Reuters) - South Sudan will finish paying off its debt to neighbour Sudan in June with a final cargo of crude oil, South Sudan’s oil minister Ezekiel Lol Gatkuoth told Reuters on the sidelines of the Africa Oil and Power investor forum in London.

FILE PHOTO: South Sudan's Minister of Petroleum, Ezekiel Lol Gatkuoth, speaks during a Reuters interview in his office in Juba, South Sudan October 10, 2017. REUTERS/Jok Solomon/File Photo

The debt stems from a 2012 deal that ended a dispute over oil payments between the two nations after South Sudan seceded the previous year. In the deal, South Sudan agreed to pay $3 billion to its northern neighbour.

Two years after its secession from Sudan, South Sudan was plunged into civil war, which led to a sharp cut in its oil production that the country is now trying to reverse.

The country is currently producing 130,000 barrels per day (bpd) and aims to hit 280,000 bpd later this year. Its peak was 350,000 bpd in 2011.

A ramp up this year will come from its Dar Petroleum Operating Co, in which China’s CNPC and Malaysia’s Petronas have major stakes. GPOC, its other venture that has produced oil and whose largest stakeholder is CNPC, has taken initial steps to resume operations in its Unity oilfield. South Sudan’s Nilepet holds an 8 percent stake in GPOC.

Gatkuoth said GPOC had hired Hong Kong-listed Frontier Services Group (FSG), which produced a security assessment in March saying it would be safe for GPOC to resume output.

FSG is owned by Erik Prince, a former U.S. Navy seal and brother of U.S. Education Secretary Betsy DeVos. Prince founded a company formerly known as Blackwater that he was forced to sell after some of its guards were convicted of killing 14 unarmed Iraqi civilians.

Gatkuoth said several steps remained before GPOC would resume output and that another venture SPOC, led by Petronas, had not yet conducted a similar survey.

“The next step (for GPOC) is a technical assessment to see what damage has been done,” the minister said.

“The processing facility was destroyed, the control room was destroyed but the pipelines and wellheads are intact. The power lines were destroyed but we got an agreement with Sudan to supply 8 megawatts (MW); the facility needs 18 MW.”

The United States ramped up its sanctions on South Sudan in March this year by adding 15 companies operating in the African country’s oil sector to its list. Washington accused the government and officials of using revenues “to purchase weapons and fund irregular militias that undermine the peace, security, and stability of South Sudan.”

Gatkuoth said the restrictions had no impact on oil production other than deterring U.S. investment, but added he was in discussions with foreign firms such as Total for stakes in some oilfields.

“The machines, rigs ... they all come from China but I want U.S. companies to come back as well,” he said.

Land-locked South Sudan sells its crude via pipeline through Sudan. Gatkuoth said Switzerland-based Trafigura, Lebanon’s BB Energy and Nigeria’s Sahara Energy were the three buyers for the country’s crude with cash advances.

Trafigura used to be the sole lifter but BB Energy began last year and Sahara will start this month. He said South Sudan was not seeking long-term pre-payments for now.

Additional reporting by Maggie Fick in Nairobi; Editing by Mark Potter

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