S Sudan threatens to quit Opec+ if output plans blocked

South Sudan will quit Opec+ if the group stands in the way of its ambitious plan to increase crude output to 230,000 b/d by 2024, first vice-president Riek Machar told an industry conference in Juba on Tuesday.

"Our minister of petroleum has had issues with Opec over the increment of crude production but we shall instead quit the organisation if we are hindered from increasing oil production," Machar said. "Our target is to increase crude production right now and become an oil hub in the east African region and foster economic development for our people," Machar said.

South Sudan was among the 10 countries that teamed up with Opec to form the wider Opec+ group in 2017. Although one of the smaller producers in the coalition — with output of 160,000 b/d in August, according to Argus estimates — it has regularly exceeded its agreed Opec+ quotas. The target for August was around 130,000 b/d.

In an internal report, an Opec+ technical committee found that South Sudan accounts for around half of the coalition's overproduction to date. The group has asked members to compensate for past overproduction with additional cuts before the current agreement expires at the end of the year, but the report shows South Sudan had yet to submit compensation plans as of late August.

South Sudan's oil minister Puot Kang Chol said today that current production is only 107,000 b/d as a result of "several challenges such as floods and depleted oil wells". The oil ministry has begun an environmental audit of all wells to map out ways to increase production without endangering the environment in line with international standards, Chol said. "With the global happenings in the world, especially the Russia-Ukraine war, it warrants us to produce more oil," he added.

Changes within the Opec+ alliance are infrequent. Qatar was the last country to formally exit the group, effective as of January 2019. Mexico, which remains part of the group's output agreement, has not been allocated a quota since July 2020. South Sudan said back in October 2020 that it wanted to renegotiate its production quota because output from some blocks had resumed since it first entered the deal.

By Mercy Matsiko and Ruxandra Iordache