South Sudan faces rapid drop in crude output as blocks pass peak production

(Bloomberg) --South Sudan is experiencing a rapid drop in crude output as producing oil blocks have hit peaks and have begun to decline, according to Ministry of Petroleum Undersecretary Awow Daniel Chuang.

Block 3 and 7 in Upper Nile have fallen to 103,000 barrels per day from an initial 120,000 bpd. Blocks 1, 2 and 4 have come down to 48,000 bpd from 53,000 bpd, he said by phone from the capital, Juba, on Thursday. Block 5A is yielding 3,000 bpd after production resumed, and is expected to reach 8,000 bpd by the end of the year.

“The only potential is block 5A, which still remains capped,” he said. “Today the production has dropped to 154,000 barrels a day from three producing areas.” It used to be as much as 180,000 barrels two years ago.

Oil shipments account for almost all of government revenues and declining reserves could spell doom for one of the world’s poorest economies. To reverse the downturn, the African nation’s government will aim to improve the recovery factor -- the extractable crude, Chuang said, without giving details. Blocks 3 and 7 have a recovery factor of only 23%, while blocks 1, 2 and 4 have 33%, he said.

“Block 3 and 7 can be increased to 35%, block 1, 2 and 4 to 45% and this will significantly increase production rates,” he said.