Disruptions Likely Into 2014 As Conflict Endures
BMI View: The continuing violence between the military and rebel forces has begun to seriously affect South Sudan's oil industry. With the violence likely to escalate further, we see significant disruptions to production as increasingly likely. This will have economic consequences on the oil-dependent country, and could further discourage much-needed investment in the country's exploration and production (E&P) sector.
Former vice president and rebel leader Riek Machar has rejected President Salva Kiir's ceasefire offer made on December 27. Fighting has continued between the army and ethnic militias in South Sudan, leaving at least 1,000 dead according to Reuters. Although unverified, Machar stated that his forces have captured all of the Unity state and three quarters of the Upper Nile state, which together make up South Sudan's daily production of 245,000 barrels per day (b/d). Other reports highlight that in the Upper Nile state, the control of towns is split between government forces in the north and a mixture of rebel troops and armed civilians in the south. All in all, the increasing violence points towards the likelihood that production has already been significantly disrupted, and could eventually be entirely interrupted.
45,000 b/d Announced Outages, Larger Numbers More Likely
|Oil Production Recovery Largely At Risk With Enduring Violence|
|Sudan/South Sudan Unplanned Supply Outages (b/d)|