The future of oil production in South Sudan

40896576764 3827edb9a7 cWith the third largest oil reserves in sub-Saharan Africa, the Republic of South Sudan has the means to increase its per capita GDP and put the country on the road to self-sufficiency

After a five-year disruption caused by civil war, the country has now boosted crude production to 180,000 bbl a day. The Ministry of Petroleum is targeting production levels of 350,000 bbl a day, the pre-war level.

The government will launch its 2020 licensing round at South Sudan Oil & Power in Juba on 29-30 October. It will use the conference to improve understanding of the country’s oil sector and will highlight the positive changes that have taken place in South Sudan over the last year. One such development is the new deal signed by Oranto Petroleum, Africa’s largest privately held, Africa-focused exploration and production group.

This, together with a deal with South Africa’s Strategic Fuel Fund, point to the positive mood around investment in South Sudan. A new peace deal, stronger ties with Sudan and the discovery of major reserves by a China National Petroleum Corporation exploration, means the government expects strong interest in the new licensing rounds. Minister of Petroleum, Awow Daniel Chuang believes, “The new discovery will whet the appetite of international oil investors, bringing them to South Sudan. They will see the opportunities as we gear up our efforts to explore the oil and gas fields in the country.”

The South Sudanese government will also use the South Sudan Oil & Power 2019 platform to announce a tender for an environmental audit of the country’s producing oil fields.

The Petroleum Act of 2012, enacted a year after independence, governs the oil sector in South Sudan. The Act is designed to improve management of the environment, and to combat the impact the sector has had after years of neglect by the government of Sudan in Khartoum, and the pollution left in its wake.

However, the civil war meant proper environmental management, ‘in an ethical, efficient, transparent and accountable manner, based on economically sustainable principles’, was put on hold.

The energy sector is the country’s dominant industry, and in peace, the country has found it a challenge to balance developmental needs with the spirit of environmental protection enshrined in the Petroleum Act. In oil-producing areas, there has been a loss of grazing land, deforestation, soil and water contamination, and numerous other health issues.

President Salva Kiir, writing in 2018’s South Sudan First State of Environment and Outlook Report, explained that the country’s desire to become the bread basket and economic powerhouse of East Central Africa has negatively affected the environment. “The lack of environmental standards and guidelines to safeguard the exploration and exploitation in the extractive industry has led to pollution in the oil fields and in the surrounding areas. This trend needs to be checked through the formulation of environmental policies, standards and guidelines, and enforcement of these instruments.”

One of the benefits from the resumption of oil production has been the introduction of new oil field technology, especially new environmental control technology. The Ministry of Petroleum estimates that up to 70 per cent of South Sudan’s oil reserves are underexplored.

Ahead of any new exploration and drilling, the government has committed to conducting an environmental audit. Minister Chuang says understanding the pollution damage will allow authorities to put systems in place to manage environmental impact as the country looks to ramp up production.

The environmental audit will be conducted by an independent international organisation, mandated to suggest best practices for new exploration, as well as ways to repair the historical damage in the oil-rich Upper Nile region of South Sudan.

At a press briefing late in August in Juba, President Salva Kiir warned that the government would be taking a strong stance against pollution in oil producing areas. While authorities are eager to welcome new exploration and production, companies would be held to a high standard.

He warned, “I will not tolerate irresponsible activities in the oil sector”, as the era of “bad business” comes to an end.

South Sudan Oil & Power 2019 takes place in Juba 29-30 October. Learn more and register at www.ssop2019.com

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