South Sudan crisis deepens as President sacks cabinet

South Sudanese President Kiir speaks during a news conference with his Sudanese counterpart al-Bashir at Khartoum Airport24 July 2013, News wires – The oil industry is bracing itself for the impact of South Sudanese President Salva Kiir’s decision to sack his entire cabinet. including his second in command.

The oil-rich country is already in somewhat of a state of crisis as it continues to wind down production under recent orders from its neighbour to the north, Sudan, which should eventually see a total halt to flows by 7 August.

In the latest development in an ongoing power struggle, Kiir issued a decree axing all his ministers, including vice president and chief rival Riek Machar.

Of more direct significance to the country’s oil industry, Kiir also sacked Pagan Amum, secretary-general of the ruling Sudan People’s Liberation Movement, SPLM. Amum has been the country’s senior negotiator in ongoing oil and security talks with Sudan.

Extra security has reportedly been set up around ministry buildings with a radio address appealing for calm among the populace in reaction to the bold presidential move.

South Sudan, already financially crippled from previous shut-ins following its split from Sudan in July 2011, is facing the prospect of once again having no stable commodity to fill the country’s coffers for some time.

The land-locked country has no export infrastructure of its own and so must send oil through Sudan’s pipelines for discharge at ports in the Red Sea. When it gained independence, South Sudan took with it about three quarters of the once unified country’s total oil reserves.

Khartoum recently ordered South Sudan to begin shutting in all production unless it halted its support of insurgents along the countries’ border, an allegation Juba has denied.

Production was swiftly slashed from 200,000 barrels per day to 160,000 bpd and was set to hit about 100,000 bpd last weekend.

South Sudan’s Oil Minister Stephen Dhieu Dau said recently: “This unilateral decision by the government of Sudan to stop the flow of the oil to the international markets is unjustifiable and it will affect the oil investment climate.”

A series of letters between the two nations ended with Khartoum ordering a complete shut-in by 7 August.

“This has left us with limited options on how to find a lasting solution to the issue,” Dau explained.

On the sacking of cabinet by Kiir, a Juba-based analyst, who wished not to be identified, told the UK’s Guardian newspaper: “The international community must urgently ensure this crisis does not spiral into a full-blown catastrophe. They must appeal for calm and demand President Kiir respect the constitution and uphold democracy.

“This is a crisis that has been looming for months, if not years. The international community – and particularly South Sudan’s strongest backers in the US and Europe – have done a great disservice to the people of the new country by ignoring the signs, allowing the corruption, poor governance, and political repression at the root of yesterday’s events go unchecked for so long.

“(The crisis) threatens not just the country and its people, but also the fragile relationship between South Sudan and Sudan.”

– Upstream

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