Neighbour Sudan recently ordered the Juba administration to begin shutting in production as it accused South Sudan of supporting rebel groups in border areas.
Production down south has subsequently gone from 200,000 barrels per day past 160,000 bpd and is thought to be below 100,000 bpd currently.
The ultimatum had called for a complete shut in by 7 August, but Ethiopia has intervened to broker a temporary resolution, according to a report.
South Sudan will now not have to shut in all its production for another two weeks after the initial deadline, Reuters reported on Friday, citing Ethiopia’s Foreign Ministry.
The stay is designed to allow for more time for claims from both sides that the other is supporting rebels, claims both deny.
South Sudan, already financially crippled from previous shut-ins following its split from Sudan in July 2011, is still 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.
To add to the country’s woes, President Salva Kiir this week 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.