South Sudan Hopes to Complete TFA Payments to Sudan by 2021
South Sudan’s Undersecretary of the Ministry of Petroleum, Awow Daniel Chuang says relations with Sudan have improved and South Sudan hopes to complete payments to its neighbor under the transitional financial arrangement (TFA) by 2021, after which it will be in a position to renegotiate better terms.
South Sudan relies on Sudan to export its crude via a pipeline through Khartoum to the Red Sea. The Undersecretary also noted that the relationship between the two countries has improved since the change of government in South Sudan and the country pays the fees that are set out in the agreement with Sudan.
“There are four fees that South Sudan pays for every barrel produced. A transportation fee, a processing fee, a transit fee, and the non-commercial tariff, the TFA. The first three fees are commercial,” says Chuang. “These fees have a major impact on the economy of South Sudan and the oil industry, particularly the political TFA fee as it amounts to $15 per barrel. The three commercial fees combined are between $9 and $11. Often, people talk about South Sudan having a lot of oil money but forget how much we pay Sudan. They don’t understand where this money goes.”
Meanwhile, South Sudan is keen to restore output from its oilfield, Block 5A. The country also hopes to raise its oil production output from 170,000-172,000 barrels per day (bpd) to 250,000 bpd by 2021 when more of the country’s oil fields reopen.
“Blocks 3 and 7 in Great Upper Nile is operated by Dar Petroleum Operating Company, and they are producing around 130,000 bpd, which sometimes drops due to logistic and other challenges. In Blocks 1, 2, and 4 we are producing around 52,000 bpd at the moment, which is projected to be around 60,000 bpd.” he added.
South Sudan is also a member of the Organization of the Petroleum Exporting Countries (OPEC+) and non-OPEC members coalition and has committed to cut output to 100,000 bpd for May, June, and July, while for August onward, it agreed to produce 106,000 bpd from its reference level of 130,000 bpd. According to the Undersecretary, being part of OPEC+ is beneficial for the country.