S. Sudan pitches its 14 oil blocks to investors as a unity gov’t due next month
November 2, 2019
By Deng Machol
Juba – South Sudan, world youngest country is pitching its oil and gas to the international and region investors in a bid to jump-start economic recovery as the country is hoping to put years of war behind it with the formation of a new unity government on November 12.
The oil-rich country was made another its second foreign investment pitch since declaring an end to civil war in 2018. The country is eager to make up for $4 billion in lost revenue caused by the country’s five – year conflict after president Salva Kiir’s groups and key armed opposition groups, including ex-rebel Riek Machar signed a power-sharing agreement last year, September 20.
The finale, 3rd Oil & Power conference in Juba has become a focal selling point for opportunities in South Sudan. It was attended by six – hundreds of industry executives and dignitaries from South Sudan, Kenya, Ethiopia, Egypt, Somalia, Norway, the United States and South Africa, the conference was opened by First Vice President H.E. Taban Deng Gai and Minister of Petroleum Awow Daniel Chuang, among others.
Awow Daniel Chuang, South Sudan’s oil minister, said the government is planning to launch the country’s first oil and gas bidding round within the first quarter of 2020, they are inviting all investors to have a look at these blocks.
“This year we have a lot of plans for us to launch the licensing round by the first quarter of 2020, and for us to invest in those areas as the government is key for us to get the information,” said Awow during third oil and power conference in Juba.
Minister Awow said Juba hopes to establish a data room for the blocks in two months, before licensing them on a competitive basis from early 2020, that will add more value to the country’s national resources.
However, the current data collection which is done by the ministry of petroleum provides a platform for investors to invest in the oil sector.
“In November, we are going to launch an environmental audit and there are a lot of companies that are interested to invest in this area, this will be an opened tender,” Awow said.
Guillaume Doane, Chief Executive of Africa’s Oil and Power, says Africa’s oil reinstates its commitment to supporting the country and its people.
“We believe that investment is the pillar to peace and here the country has demonstrated that stability goes together with economic prosperity,” said Doane.
Meanwhile, Doane said everyday there is a new change, new development and new investment in South Sudan, as a clear indication for investors to invest in, further urges investors to invest in education, health, roads and oil industry, among other sectors.
“Vote with your wallets and invest in the exploration of oil in bridges, invest in the people because South Sudan has talented persons in the oil and gas sector,” Doane added.
Also, African Energy Chamber Chairman, CEO of the Centurion Law Group Nj Ayuk, urged the oil industry to support South Sudan’s recovery with investment, calling for greater inflow of capital and technology into the country to boost recovery and stability
In line with the event’s focus on finance, Ayuk called on the government to continue working towards creating an enabling environment for businesses in order to attract more investments into the country.
“South Sudan’s oil industry will do even better when there is a good governance, free-market capitalism, limited-government and individual freedoms because it helps the people at every level of society to prosper. The government and the oil industry must embrace it and respect the sanctity of contracts,” said Ayuk, during his keynote speech at the opening of the oil and power conference.
As South Sudan launched a new licensing round, Ayuk reminded the country’s authorities of the challenge of having a transparent bidding round and of attracting highly capable companies to explore oil and gas.
“The chamber will support South Sudan without reservation in this effort, because oil and gas is the backbone of the economy,” Ayuk avowed.
Focus on region
South Sudan First Vice President, Taban Deng Gai said having petroleum infrastructure such as oil refineries in the region would help alleviate the fuel crises in many countries.
To reduce imported costs from abroad, Taban explained that building of refineries would help the region save billions of dollars that countries spend on importing refined petroleum products annually.
“I am aware the volume of Ethiopian imports of refine products is from $5 to $7 billion annually. South Sudan can take part in this by building an oil refinery in Poloch,” said Taban. I believe also in DRC, CAR, part of Kenya and Uganda. Let’s think critically about this.”
However, some of South Sudan’s oil wells are located close to Ethiopia’s South Western border.
On the other hand, Ethiopian State minister of Mines and Petroleum, Dr. Koang Tutlan further asked governments to address insecurity, something he says it is affecting stability and growth in the entire region.
“With Ethiopia’s population of 100 million and huge demand of hydro-carbon, we can provide one of the best markets for South Sudan oil because of proximity,” said Koang.
In the same event, Kenya’s Special Envoy to South Sudan, Stephen Kalonzo Musyoka, said progress in intra- African trade through the African Continental Free Trade Area (|AfCFTA) would spread the benefits of natural resources to the most deserving areas.
“We must invest in regional institutions that support mutual political and economic objectives and hasten regional integration,” said Musyoka.
New oil discovery
In August, South Sudan made a new oil discovery in the Adar oil field in Block 3, containing more than 37 million barrels of recoverable oil. The discovery was announced by the Dar Petroleum Operating Company, a consortium led by China National Petroleum Cooperation.
Awow revealed that the new discovery in Block 5A and in the Adar oil field will become a game changer as it is the first discovery made since independence, giving hope to investors interested in South Sudan’s energy sector.
Minister Awow stressed that the new discovery will increase the desire of regional and international oil investors to enter the country’s oil and gas sector.
“The number of blocks that we used to say was eight, but we have added more due to more discoveries in the areas we have never demarcated before. All those blocks will be opened for tending, and that is why we are planning to launch the licensing round in a bid by next year,” he said. “As of now we have a lot of investors that are ready to apply, including the companies from the West, America, Russia, India, and China that have shown interest, but of course we can’t negotiate with them until the right time come,” said Awow.
Now, the Block 5A, which is located in the Muglad-Sudd Rift Basin on the same geological trend as the Greater Nile Oil Project in Sudan will resumption early November.
According to Minister Awow, the Block 5A has a production capacity of 80,000 barrels per day (bpd) of the higher quality Nile blend, the potential resumption of Block 5A comes at a time when the country is about to achieve a durable peace as parties are expected to form a new unity government on Nov. 12.
In order to increase production, Ayuk also urged the oil industry to speed up exploration programs and keep working on putting back damaged oil fields into production.
“We applaud CNPC for its recent 300-million-barrel discovery in South Sudan and hope to see the government speeding up approvals for field development plans,” said Ayuk.
Awow said the issue of finance still remains the biggest challenge in developing the rich resources, include oil in the country.
“Finance is the only thing lacking to develop those resources available in the country so that we can have economy that is viable,” said Awow.
Youth, gender empower
The platform has also shown calls for youth and women to be empowered through training to take part in the oil and gas industry.
The Africa Energy Chamber is supporting several domestic capacity building initiatives in South Sudan.
“it is important to encourage young men and women who find opportunities, have ideas for innovative services in oil and gas, those who have the courage to deploy capital, accept risk, and make it happen. They deserve to be supported,” said Ayuk, while reminding the audience.
Ayuk is strongly believes that local content and women empowerment is key today more than ever, urged the government and the oil industry to enact special programs to promote women.
“You can’t be a true oil man if you don’t support women to grow in the industry. When we support women in oil and gas, we support the African family because women invest more in the family unit today in Africa,” Ayuk explained.
Mr. Ayuk also used this platform to advocate for better stakeholder cooperation, and urged all political factions to make concessions and respect the peace agreement. “The presence of oil should incentivize dialogue between all parties to the current conflict and push for resolution of minor differences to be resolved,” he declared.
Both investors have shown an interest in 14 blocks newly discovered blocks, the blocks would be licensed competitively from next year.
South Sudan gets almost all its revenue from oil and has boosted output, as it struggles to rebuild its devastated economy after a five-year civil war.
South Sudan have recently resumed production at key oilfields following a permanent ceasefire and improving business conditions as attractions to investors.
South Sudan currently produces 175,000 barrels per day, about a third of the potential 500, 000 bpd, despite the sector being largely unexplored.
Last year oil and power conference enabled South Sudan and South Africa to sign three projects deal that would see the former’s Strategic Fuel Fund invest in the latter through the Nile Petroleum company.
South Africa invested $1 billion U to cover oil exploration and production, building of an oil refinery and the construction of a pipeline.
This third oil conference focuses on finance and new investment, and cross-sector involvement from government and private enterprises, also an avenue for the government to have a direct dialogue, negotiations and to make deals with investors interested in oil and gas acreages and future investments in South Sudan.
With, a holding ceasefire, there is improving investment conditions for the oil and gas sector in South Sudan.
South Sudan has the third-largest oil reserves in sub – Saharan Africa, estimated at 3.5 billion barrels and much more still remains unexplored.
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