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South Sudan to shut down oil industry next week

July 23, 2013

JUBA, South Sudan (AP) — South Sudan’s oil minister said Tuesday the country would shut down its oil production by next week ahead of the deadline Sudan set for companies in its territory to stop receiving South Sudan’s crude.

The stoppage — a crippling blow to South Sudan’s government budget — will be the second shut-down of the country’s only real industry since South Sudan peacefully broke away from Sudan in July 2011. The stoppages are evidence of the lingering bad blood between two countries that fought a decades-long civil war.

Sudan notified South Sudan in June of its intention to stop receiving, processing and transporting South Sudan’s crude within two months. Khartoum says it will only allow Juba to transport its crude through Sudanese territory if South Sudan stops supporting rebels fighting to topple the government in Khartoum.

South Sudan has repeatedly denied supporting SPLM-North rebels and in turn accuses Khartoum of supporting rebels in South Sudan led by David Yau Yau.

South Sudan derives almost all its government budget from the oil industry, but the south’s oil can only be shipped to market via Sudan’s pipelines.

Dau said South Sudan was shutting down its oil industry early to avoid any equipment or environmental damage that could be caused if Khartoum implements a unilateral shut-down.

Reduction of oil production in South Sudan began July 16, Dau said. Sudan ordered its oil companies to stop receiving crude by Aug. 7.

Most of South Sudan’s oil is produced in Upper Nile state, where 200,000 barrels are pumped per day. By Monday, that figure had been reduced to 100,000 barrels per day, said Mawien Makol Arik, a spokesman in South Sudan’s foreign affairs ministry.

South Sudan shut down its oil industry in January 2012 after accusing Sudan of stealing some of its oil. The south didn’t resume oil production until April of this year. From that April re-start until its shutdown next week the nation will have pumped 6.4 million barrels worth around $500 million, Dau said.