June 28, 2019 / 2:07 PM / a year ago

South Sudan suspends all pre-sales oil contracts

JUBA (Reuters) - South Sudan has suspended all pre-sales oil contracts to boost competition in its petroleum sector and drive up prices, the information minister said on Friday.

The country gets almost all of its revenue from oil and has been boosting production as it struggles to rebuild its shattered economy from the wreckage of a five-year civil war.

“The president directed that all pre-sales contract should be suspended. These pre-sales contracts are not healthy and they are actually destroying the economy,” Michael Makuei Lueth, the information minister, told reporters after a cabinet meeting.

The move was expected to boost the price of South Sudan’s oil in the market, he said, without saying which companies have secured pre-sales contracts.

“When you sell to a specific company without competition, definitely you agree on certain rates but when it is free competition you give to the highest bidder,” he said.

South Sudan’s total oil production is nearly 180,000 barrels per day (bpd), official figures show. But the government is keen to reach pre-war levels of 350,000 to 400,000 bpd by mid-2020.

A fragile ceasefire reached in September ended the civil war, but plans to form a unity government in May were delayed after there was no funding to disarm, retrain and integrate militias and rebels.

Writing by Duncan Miriri; editing by David Evans

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