S. Sudan Oil State Capital Divided, Crude Output Down

Reuters

JUBA, Feb 20 (Reuters) - The capital of South Sudan's main oil-producing region was divided between the army and rebels on Thursday after the worst fighting since a January ceasefire stoked jitters in global oil markets.

The Juba government said it remained committed to peace talks but that it had to react after rebels allied to former vice president Riek Machar on Tuesday attacked Malakal, which lies on the edge of Upper Nile state's oil fields.

A petroleum ministry official told Reuters oil production had fallen to about 170,000 barrels per day even before the rebel strike on Malakal, a fall of around a third.

"The reduction has nothing to do with the fighting but more (to do with) technical issues," the official said, speaking on condition of anonymity.

"We have had to rely on river transport for technical equipment for the last two months and you cannot guarantee safety on that channel," he said.

Even so, the attack on Malakal raises concerns over the security of South Sudan's northern oil wells - an economic lifeline for Juba and also neighbouring Sudan, which earns vital hard currency from fees received for use of its oil pipeline.

International pressure is mounting on the warring factions to return to negotiations, although Western diplomats say in private that mutual recriminations over ceasefire violations raise questions about each side's commitment to talks.


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