South Sudan woos investors as peace deal revives oil production

By Deng Machol

South Sudanese Petroleum Ezekiel Lul addresing the investors, Nov 20, 2018. photo by Deng Machol
South Sudanese Petroleum Ezekiel Lul addresing the investors, Nov 20, 2018. photo by Deng Machol

Juba – South Sudan government on Tuesday launched the nation’s second international oil and power conference, a gathering aims at attracting prospective investors from global oil and energy firms.

The first oil conference was held in October 2017. South Sudan has the third largest oil reserves in sub-Saharan Africa, but most of its oil facilities have been destroyed in the civil war that started in 2013 – two years after it seceded from Sudan.

More than 400 international and local companies are attending this week’s Africa Oil & Power Conference in the capital, Juba, up from the 300 that attended the initial conference last year.

Some of its oilfields have recently restarted oil production, but returning to full production capacity will take time. In August, South Sudan resumed pumping of crude oil from Toma South oilfied, where production had been stopped since the civil war erupted five years ago.

South Sudan depends on 98% oil revenues for its services, but a country still lag behind in term of physical infrastructure development. South Sudan oil is transported through Sudan due to lack of pipeline and refinery facilities in the country.

Speaking at the opening ceremony, South Sudan First Vice President Taban Deng Gai expressed his government’s interest and commitment to develop the country’s oil industry.

Deng further told the oil companies and investors to be mindful of the environmental pollution while investing in the oil sector in the country.

Investors listening to the speeches, Photo by Deng Machol, Nov 20, 2018
Investors listening to the speeches, Photo by Deng Machol, Nov 20, 2018

“The government will continue to work tirelessly to create an enabling environment for business to thrive in the republic of South Sudan including a fair and balance local content regulation. the development of oil and gas sector will encourage economic diversification. let us be reminded of our responsibilities in the areas of social contract. the majority of South Sudan oil is based in the wetlands where we have faced alot of issue of pollution. I hope, in such kinds of forums when we discuss how to enhance productivity, issues of environment should not be left behind,” Deng said on Tuesday in Juba.

However, South Sudan is making its first big foreign investment pitch since asserting an end to civil war, but the oil-rich nation faces disinclination from some companies that want to make sure the brittle new revitalized peace deal holds.

The East Africa youngest nation is eager to make up for $4 billion in lost revenue caused by the five-year conflict after the government and armed opposition signed a power-sharing agreement two months ago.

Tapping 3.5 billion barrels of oil reserves, the third largest in Africa, is the fastest route for South Sudan, whose economy is almost entirely dependent on oil exports.

Meanwhile, South Sudan Oil minister Ezekiel Lul said the mobilized the oil investors to come and operating in the country in order to lifted up oil production in the country.

 “This year is better than last year. we have mobilized a lot of companies in investing in the Republic of South Sudan, not only in the oil industry but in different areas,” Lul said.

South Sudanese FVP Taban Deng addressing the oil and power confrence attendees in Juba, photo by Deng Machol
South Sudanese FVP Taban Deng addressing the oil and power confrence attendees in Juba, photo by Deng Machol

On the same event, Sudan Petroleum Minister Azhari Abdallah said the two countries plan to sign a cooperation deal that would allow experts in the oil sectors to exchange visits.

He said the resumption of oil production will strength the economics of the two countries, including the foreign relations of the two sisterly countries.

 “I am pleased to announce that South Sudan’s first crude oil is now ready for shipment in the port Sudan,” Abdallah said.

Also, APPO SG Mahaman Gaya, said they are working to stabilize and strength the oil and energy in the Africa continent.

AOP CEO Gullaune Doane urged South Sudan government to put much focus on the trade, which he says it is easy to improve a country’s socio – economic development.

The government is offering prospective investors incentives such as a tax-free grace period of up to 10 years. It hopes to build on the momentum created in August when drilling resumed in key oil fields for the first time since 2013. The aim is to return to the pre-conflict production of 350,000 barrels per day. But some at the investment conference expressed vigilant buoyancy after preliminary signs of growth.

The companies, already licensed to operate in the newly reopened oil fields in Unity State are China National Petroleum Corporation, India-based Oil and Natural Gas Corporation and Malaysia-based Petronas.

On the hand, early next year local oil marketing company Trinity Energy will begin building East Africa’s only oil refinery, a $350 million project that will take about 18 months to complete. It will be able to produce 25,000 barrels per day. But at now, South Sudan exports its crude oil, only to buy it back.

More so, South Sudan is currently produces about 150,000 barrels per day, 40 percent of which goes to cover operating costs. The government is left with 90,000 barrels, but partners such as China’s CNPC and Malaysia’s Petronas take 20 percent of it.

delegates of the oil and power conference, Nov 20, 2018

While, the remaining profit has to be shared with Sudan’s government in Khartoum as South Sudan has to use its infrastructure to process and transport its oil. Every barrel produced is vital to Africa’s youngest nation, as oil provides nearly all of its gross domestic product.

With the revitalized peace deal at the hand, South Sudan hopes to return to full oil production capacity in an attempt to strengthen and recover its fraught economy.

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