South Sudan: With an Eye on Oil

Rich in oil, iron ore and other mineral resources, South Sudan contains the third largest oil reserves in sub-Saharan Africa after Angola and Nigeria, estimated at 3.5 billion barrels. Reserves are found throughout the country, especially in the north, where oil production is concentrated. Despite rising production pre-COVID-19, only 30% of the country has been explored to date, creating an open frontier market for investors. A landmark peace deal in October 2018, the resumption of production at several key oilfields, a recent onshore discovery and a soon-to-be reformed regulatory framework have significantly improved the investment climate in the country, with particularly strong investment opportunities in exploration and infrastructure.

Kicking into Production

At the end of 2019, production levels stood at 186,000 barrels per day (bpd). The Ministry of Petroleum has set a target of 350,000 to 400,000 bpd by the end of 2025, which will be achieved both by leveraging existing fields into production and driving new frontier exploration. Recent years have seen a significant increase in foreign-based drilling and an uptick in foreign investment from exploration and production companies. This includes Nigeria’s Oranto Petroleum, which signed a six-year exploration and production sharing agreement (EPSA) for Block B3 in 2017 and South Africa’s Strategic Fuel Fund (SFF), which signed an EPSA for Block B2 in March 2019.

Meanwhile, exploration in frontier blocks is picking up. In August 2019, the CNPC-led consortium Dar Petroleum Operating Company made a small light oil discovery in Northern Upper Nile State, representing the first discovery since 2011.

Located in the Adar field in Block 3, the discovery contains 300 million barrels of recoverable oil and will be linked to the nearby Paloch fields. Because the majority of South Sudan’s territory remains unexplored, geophysical and seismic data gathering will be critical in the years to come.

The country was initially set to put 14 nothern blocks on offer via open tender in the first quarter of 2020, however, the bidding round has since been postponed to early 2021 due to COVID-19. To spark further interest in available acreage, South Sudan will conduct new seismic survey in northern Unity state near Block 5A. Approximately 20 companies have already expressed interest in the tender, including state-owned Nilepet, which has expressed interest in becoming an operator.

Rebuilding its Infrastructure

In December 2019, Sudan and South Sudan agreed to extend their agreement to cooperate on oil and related economic arrangements until March 2022. All of South Sudan’s oil is exported via two pipelines through Sudan for refining and export via a Red Sea terminal. Domestic infrastructure is severely lacking in the country as a result of prolonged conflict and accordingly represents a substantial opportunity for foreign investment.

On June 29-30, Africa Oil & Power will return to Juba for the fourth edition of South Sudan Oil & Power, this time taking a wide view of the economic opportunities in the country and promoting South Sudanese investment projects to a global audience.

The Ministry of Petroleum and the Ministry of Electricity and Dams will join together with other key ministries and agencies in South Sudan to showcase the best of what the country has to offer in sectors including infrastructure, agriculture, mining, transport, and regional trade.

Meet and partner with key actors including all operating companies (DPOC, GPOC and SPOC), national oil company Nilepet, heads of local enterprises and government leaders at South Sudan Oil & Power 2021. Visit www.ssop2021.com for more information and registration.