Search results

The US government has imposed licensing restrictions on South Sudan’s Ministry of Petroleum, Ministry of Mining, state-owned Nile Petroleum Corporation (Nilepet) and 12 other oil-related organisations. The restrictions were issued on 21 March by the Bureau of Industry and Security (BIS) at the US Department of Commerce “as part of the US effort to end the ongoing conflict and resolve the humanitarian crisis in South Sudan”, a statement said.

In order to give crude from planned new exploration blocks a route to market, Juba is looking to resuscitate longstanding plans to build another export pipeline, which would offer an alternative to the two existing routes via Sudan. The government is in “discussions with Kenya and Uganda”, petroleum minister Ezekiel Lol Gatkuoth told African Energy in an interview. A link to Kenya is the preferred option.

The government of South Sudan has decided to allocate shares in two oil blocks to Total, Tullow Oil and Kuwait Foreign Petroleum Exploration Company (Kufpec), petroleum minister Ezekiel Lol Gatkuoth told African Energy on 22 February. The government is also in talks with Spain’s Holdcorp over a contract for a third block, he said. The petroleum ministry is targeting an increase in crude production to 200,000 b/d by end-2018 and 300,000 b/d a year later, said Lol Gatkuoth, up from estimated Q1 2018 output of 120,000 b/d.

The South Sudan petroleum ministry is continuing its efforts to pre-finance crude deals to support the continued functioning of the government and its war effort. “We have pre-financing deals with Trafigura and BB Energy,” petroleum minister Ezekiel Lol Gatkuoth told African Energy in an interview. Dutch trader Trafigura has signed several pre-financing deals with Juba since independence, usually for several months at a time. Lebanon-based BB Energy is a relatively new entrant to the South Sudan market, but has been taking an increasing share of cargoes in recent months.

South Sudan’s oil production has dropped 55% since the onset of an internal conflict that has just entered its fifth year. Based on crude marketing data for the month of December, crude output in November was close to 118,000 b/d, compared to about 260,000 b/d in November 2013.South Sudan was plunged into crisis in December 2013 when President Salva Kiir, concerned about internal opposition to his leadership, allowed a political dispute to escalate into civil war.

South Sudan’s government plans to spend a $14.75m portion of financing from the African Development Bank (AfDB) on the long-delayed rehabilitation and expansion of the power distribution network in the capital, Juba. Parliament has approved an AfDB facility for development activities in the country totalling $47.88m, according to the chairman of parliament’s finance committee, David Nailo. A further $18m will be used to support South Sudan’s participation in regional financial institutions including the Eastern and Southern African Trade and Development Bank (formerly PTA Bank).

Regular diversions of South Sudanese crude to Sudan in compensation for use of its neighbour’s export infrastructure mean that revenues to the war-torn country continue to plunge. The only cargo scheduled to be marketed by the Government of South Sudan (GoSS) in August will instead be passed on to Petrodar Operating Company in Sudan. This will strip South Sudan’s treasury of any proceeds from the 600,000-barrel cargo, leaving it with no more than a 170,000-barrel package on a 600,000-barrel cargo being marketed by the government’s international joint venture partners. The cargo will be lifted from Port Sudan on 12-13 August.

The government has launched a tender seeking a company to carry out an audit of national oil production and petroleum industry activities and produce a 2017 audit report on the industry. Objectives of the audit include completing an accurate assessment of oil, condensate and gas reserves and production; reporting on revenue and investment flows; and making recommendations on the technical, fiscal and regulatory issues faced by the petroleum industry.

The Ministry of Petroleum has invited companies for direct negotiations on blocks B1 and B2 after talks broke down with Total, Tullow Oil and Kuwait Foreign Petroleum Exploration Company (Kufpec). A government statement on 24 April said ministry officials had held talks with the companies in Kampala in the previous two weeks, but the negotiations had reached an impasse over the proposed exploration period and cost recovery limit.

The South Sudan government’s desperation to rescue a tanking economy and its desire to distract attention from its own problems resulted in a bizarre threat in late March that it would terminate oil exploration contracts if developers failed to start surveys by the end of April. “You cannot hold my block for 30 years and think that I will be celebrating and dancing with you,” petroleum minister Ezekiel Lol Gatkuoth was quoted as saying on 21 March.

The Ministry of Petroleum and Nigeria’s Oranto Petroleum signed an exploration and production-sharing agreement (EPSA) for Block B3 in Juba on 6 March and said exploration work would start immediately. Oranto will be the technical operator and 90% shareholder of the block, with state oil company Nile Petroleum (Nilepet) holding a 10% stake.The 25,150km2 Block B3 has been open for investment for almost three years after France’s Total relinquished its interest in the block created in 2012 when the ministry divided the 118,000km2 Block B into three sections.

Block B has failed to produce a single barrel of marketable crude in its almost 40-year history. In 1980, Total signed an exploration and production-sharing agreement (EPSA) with Sudan to operate the block for a 40-year period. But development was arrested by a combination of war, sanctions and the secession of South Sudan in July 2011.Work was suspended in 1985 due to security concerns arising from the second Sudanese civil war, which raged until 2005.

South Sudan plans to raise production to 290,000 b/d in the 2017-18 fiscal year, which runs from 1 July to 30 June, finance minister and former oil minister Stephen Dhieu Dau said on 27 January. This is substantially higher than the 220,000 b/d the country was producing before the outbreak of fighting in December 2013, and almost three times the current volume being marketed by the government and its joint venture partners.According to trading data seen by African Energy, a total of 3.3m bbls of crude were due for lifting in February, equivalent to 118,000 b/d.

Almost a year after a peace agreement was signed by South Sudan’s rival factions, political stability is as elusive as ever and oil production continues to decline. The government is living from hand to mouth, using oil production to secure vital cash up front, writes Richard Nield in JubaIn the midst of renewed violent conflict in Juba that threatens South Sudan’s fragile political stability, oil production continues to fall.

Eight months after the parties in South Sudan’s civil war signed a peace deal, the formation of a unity government is finally in prospect. If the new government can end the conflict, it opens up the possibility of an increase to oil production, which has dropped by almost 50% since fighting broke out in December 2013. But damage to the oilfield infrastructure, coupled with ongoing security concerns, mean it may take several months for any meaningful rise in output to take effect.