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"Sudan & South Sudan Oil & Gas Report Q1 2014" is now available at Fast Market Research

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2013-12-06 11:24:22 - New Energy market report from Business Monitor International: "Sudan & South Sudan Oil & Gas Report Q1 2014"

With another production shut-in only narrowly averted, the recently positive diplomatic overtures between Sudan and South Sudan are encouraging but do little to resolve the long-standing tensions that led Juba to secede in 2011. As a result, we retain a cautious and largely bearish view on the long-term outlook for the sector, even though we expect a strong rebound in production in 2014-2015 -notwithstanding elevated political risks. The longer-term outlook is bearish given we expect output from South Sudan's key oil producing blocks to head lower from 2017. Despite ambitious plans and the start of small fields in Sudan, the upstream outlook is even more bearish and we expect combined output for both countries to gradually head lower from the

latter half of the decade.

The main trends and developments we highlight for Sudan and South Sudan's oil and gas sectors are:

* Our view that border and security issues could again interrupt the flow of South Sudan's oil to market played out. Only three months after restarting, oil production in Sudan again threatened to close its pipelines to South Sudanese crude which would force another production shut-in. The dispute centred on tensions related to Juba's alleged support for rebel groups. The dispute, although resolved by last minute diplomatic efforts, underscores the precarious and dependence between South Sudan and Sudan. We expect both countries to suffer under another production stoppage, and we are currently watching events play out with a view toward further revising our forecasts downward.
* We expect combined output to average 220,000 barrels per day (b/d) for 2013, rising to 370,000b/d in 2014 as production continues to recover. However, this number factors in delays and challenges as production rebounds from the shut-in over 2012. Yet the medium- to long-term outlook is less than optimistic, given that much of current production was sourced from ageing fields and the hasty shut down of wells in South Sudan may have damaged ultimate recovery rates.
* As a result we currently expect production to peak at 472,000b/d in 2016, and gradually decline from this date forward. Although there is upside risk to this outlook, with Sudan having brought online two small fields recently and major international oil companies expressing interest in restarting exploration in South Sudan, for now, we expect overall production to decline toward the latter end of the decade.
* We continue to view South Sudan as more prospective than Sudan, although we highlight there may be sizable untapped reserves in the Red Sea, where Khartoum has been pushing operators to accelerate their exploration activities. South Sudan had some progress on this front, with Total, joined by new partner ExxonMobil, reportedly planning to restart exploration on Block B.
* Critical to unleashing South Sudan's more substantial hydrocarbons potential will be more reliable export routes, upon which future upstream investment will depend. South Sudan could see progress on this front. In sign a recent deal to construct a pipeline, the Presidents of Kenya and Uganda outlined their commitment to link fields in South Sudan to the port of Lamu. This would give operators the certainty that their crude could reach markets.
. * However, in the near-to-medium term there is cause for concern regarding the production profile for fields in South Sudan, which may themselves begin to decline. This could leave combined output for Sudan and South Sudan in a downward trend toward the tail end of our forecast period.
* We continue to forecast no gas production or consumption, with plans for Sudan's first gas-fired power plant uncertain. Efforts to capture associated gas and bring gas production online have shown little momentum despite previous government targets.

Full Report Details at
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For South Sudan, the key upside risk to the reliability of exports rests with Juba's continued pursuit of export options independent of Khartoum's pipelines. At the time of writing we assumed an OPEC basket oil price for 2013 of US$105/bbl, which we see falling to US$102/bbl in 2014.

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Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

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