21st January 2021
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Oil production drops

Author: Alhadi Hawari | Published: Tuesday, July 21, 2020

OPEC and oil-producing nations are anticipating a boost in demand as more countries ease lockdowns.

Oil production has dropped to 170,000 barrels per day from 185,000 due to COVID-19 pandemic, the undersecretary at the ministry of petroleum has told Xinhua.

The drop in production is the result of global economic slowdown due to COVID-19 that has seen oil prices drop to about $40.

Awow Daniel Chuang disclosed that as a result of this situation, the government has not been earning enough oil revenues.

He said the pandemic has also disrupted transportation of logistics and consignment to the northern oil fields in Upper Nile and Unity states respectively, hence affecting production.

Production in Upper Nile reduced from 130,000 barrels per day to 120,000 barrels per day and in Unity state, it dropped from 60,000 to 50,000 barrels per day.

Awow noted that production is bound to drop amid low global oil prices as oil-producing countries tend to cut production.

“COVID-19 and slowdown of the economy have caused South Sudan a lot of problems and you know that the country depends on oil heavily,” he stated.

“So when the production drops and the global oil price drops as well, it becomes a significant loss to the government.”

Early this month, South Sudan’s central bank took steps to bolster the economy amid the COVID-19 lockdown, but an analyst warned the economy will only improve after the government restores peace and security.

The central bank lowered interest rates from 13% to 10% and lowered the cash reserve ratio from 15% to 10% to reduce economic hardships on individuals and businesses during the pandemic.

The measures are meant to reduce the overall cost of financing for the private sector and release additional cash to commercial banks, which should help spur economic activity during the COVID-19 pandemic.

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