oil and gas

South Sudan: Invest in the Renewal of the Region’s Largest Oil Producer

May 31, 2022

South Sudan, independent for 11 years, and an oil producer for over four decades, has long welcomed international oil companies – both as part of Sudan and as an independent nation. But today, the sector needs a boost of capital and innovation. With the economy relying on aid and oil revenues, we believe that energy should play a greater role in advancing South Sudan’s interests, economic growth and job creation. This can only happen if the country deepens its pool of global partners.

It was Chevron that made commercial discoveries at the Unity field in 1980, and bp and Shell that refined southern Sudan’s oil at Port Sudan on the Red Sea coast. American, French and Canadian companies took stakes in petroleum developments in Sudan before the split, despite the longtime conflict in the south.

South Sudan, as the world’s newest nation for the last decade, has attracted goodwill and investment from partners including the United States, Canada, the United Kingdom, Norway, the European Union, China, Japan and others. However, conflict and corruption eroded trust among Western countries, and American sanctions played a critical role in further restricting trade, leaving a limited group of countries and companies to actively participate in the sector.

This lack of options suppresses innovation, competition and the empowerment of local companies to grow their own energy sector. South Sudan needs more partners, and we see a great future ahead for those willing to fully explore the region’s only mature oil producer – as we see it, the gateway to East African energy.

Licensing Round Reopens Doors

Today, the Ministry of Petroleum of the Republic of South Sudan hopes to reopen the doors to global partners through the country’s first ever open licensing round, via the fifth edition of the South Sudan Oil & Power (SSOP) conference in September and at African Energy Week in October.

The sector now consists of three producing ‘joint operating companies’ with various shareholdings made up mostly of Asian national oil companies – Petronas from Malaysia, CNPC from China, and ONGC from India – as well as Nilepet, the national oil company, and two exploring companies: Strategic Fuel Fund (a South African state-owned company) and Oranto Petroleum (a private Nigerian firm).

To ramp up exploration and production, the Ministry is marketing 14 exploration licenses to oil and gas companies and invites them to visit the country, explore the assets at its new data facility, and hold discussions on 13-14 September 2022 in Juba at the SSOP event.

Doing Business in South Sudan

Currently, a vacuum exists, created by US trade restrictions on technology exports to oil and gas companies in South Sudan and overall reticence by Western countries to engage with South Sudan’s leaders and companies. The American sanctions have a much wider impact than their direct aims, with outside companies perceiving greater risk in transacting in US dollars and doing business in the country. The result: the vacuum grows more powerful and South Sudan’s pool of partners gets shallower, despite the fact that the restrictions are selective in their application.

The lack of investment and partnership options also hinders the development of local companies. Incubating a strong local private sector requires a variety of operators and project leaders to put out tenders and invite participation. Access to international technology and capital underpin private sector growth. Without a competitive, growth-oriented and varied group of investors, local empowerment and capacity building are stifled.

Energy Capital & Power (ECP), in organizing the SSOP conference since 2017, has worked closely with the government as well as international and local companies. We have seen that it is possible to do business in South Sudan and that global firms such as Schlumberger, Stanbic Bank and many more are achieving success. The investors in the joint operating companies, CNPC, Petronas and ONGC have dealt with lean years during the post-independence civil war, and have now achieved production across most of the fields shut down since 2013.

It is critical that existing partnerships remain intact and that South Sudan attracts more companies to its high potential acreages. Improving the relationship between South Sudan and the US is fundamental, but so is a realistic view of what can be done in the country today. We see a government motivated to grow the economy, build capacity and provide jobs, and to optimize and expand an established key industry. We urge companies from the US, Canada, the UK, the EU, South America and elsewhere to take another look at South Sudan and to understand how they can do business there.

Grow with East Africa’s Largest Oil Producer

The opportunities are vast in South Sudan. As East Africa’s only major oil producer, South Sudan has a head start on its neighbors. With 90% of the country’s reserves untapped, the licensing round is an open door to discover more at very low initial risk. Trade restrictions, security and exposure to other risks need to be fully understood and don’t apply equally across the board. We invite independent oil companies and service providers in particular to register for the SSOP event here and to see how they can grow with the country.

ECP stands with any organization that wishes to work together with South Sudan for a brighter, richer future. The more partners South Sudan has, and the more varied they are, the faster its potential can be unlocked – and the more growth and profit can be produced for the investor partners.

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