South Sudan calls for oil and gas investment after Total and Tullow negotiations collapse

ORA manSouth Sudan's petroleum minister, Ezekiel Lol Gatkuoth, is optimistic despite talks breaking down over B1 and B2. (Image Credit: South Sudan Ministry of Petroleum)Ezekiel Lol Gatkuoth, the South Sudanese minister of petroleum, has called for investment in oil and gas blocks B1 and B2 after negotiations broke down with French major Total

In a statement, the petroleum ministry has cited "irreconcilable differences" as the reason for the collapse in negotiations. Gatkuoth said he now welcomes investors for direct negotiations in regard to developing these blocks.

Ministry officials met with Total executives in Uganda over the past two weeks with the aim of developing an exploration and production sharing agreement (EPSA) for the blocks. UK independent Tullow and the Kuwait Foreign Petroleum Exploration Company (KUFPEC) were also involved in the negotiations which reached an impasse over the proposed exploration period and cost recovery limit. 

Gatkuoth described the discussions as "lengthy" and said it had been decided that "it is in the best interest of South Sudan to open opportunities to other potential investors".

"We had hoped for a favourable outcome but we believe these large and highly prospective blocks need a fast and ambitious development programme to achieve their full potential - B1 and B2 are now open for direct negotiation," he said.

The blocks were once part of the 120,000 sq km area known as Block B and this was divided into three licenses in 2012. It is a hydrocarbon-rich area but exploration has been limited. In March this year, African independent Oranto signed an EPSA with the South Sudanese government for B3, a block covering 25,150 sq km with estimated reserves in place of more than 3 bn barrels.

Gatkuoth said that the South Sudanese government is seeking "committed operators who are ready to invest and work with our government to comply with the laws of our country. The ministry will have a presence at the Africa Oil & Power Conference next month with the aim of advancing discussions with interested parties.

"South Sudan is creating an enabling environment for companies to operate," he said. "We want companies to invest, explore, produce and we are ready to offer incentives to investors."

This year, the petroleum ministry announced plans to double its total oil production by 2018. South Sudan currently produces 130,000 bpd.

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