S. Sudan One of Last Remaining Frontiers
Petronas is one of the main players of the South Sudan oil and gas industry, with interests in the country’s primary operating companies — Dar Petroleum Operating Company, Greater Pioneer Operating Company, and Sudd Petroleum Company. Petronas owns the majority share in Sudd Petroleum Company with 67.8 percent. In this interview with Petronas, the company talks about why South Sudan is an attractive market, and what conditions need to be improved.
How will Petronas support the South Sudan Government’s target to reach 290,000 barrels of oil per day in the next year?
All oil and gas activities are managed through the Joint Operating Companies (JOCs) that have been incorporated in South Sudan. As a shareholder, PETRONAS sets the direction of the JOC, in line with the overall aspirations of the government in regulating and expanding the oil and gas industry in South Sudan.
We are in the midst of reviewing proposals and plans for the effective resumption of production for GPOC. A lot of the success of the plans, whether to increase or resume production, very much depends on continued peace and the complete cessation of any current and potential security and safety threats to the oil and gas industry.
Why invest in South Sudan’s oil and gas sector? What are the key advantages?
The South Sudan oil and gas industry is considered to be one of the last frontiers of the oil and gas industry globally. There is still much left to be explored and developed.
Being a pioneer of the frontier though, presents its own unique rewards and challenges. For those who are bold enough with the necessary expertise and resources, the frontier always presents a chance of boundless opportunities, given the right circumstances, thorough preparation and the right environment to succeed.
How would you characterize the resource base and further potential of South Sudan compared to other global plays?
There are good and vast prospects here in the country. We do see a lot of potential opportunities, provided that long-term peace and security can be obtained and sustained.
The oil and gas industry requires extensive investments, and all risks and mitigations associated with any exploration or development plays anywhere in the world will be quantified and integrated to present an overall picture of the investment.
The attractiveness of the investment opportunities very much depends on the successful elimination/mitigation of the risks involved as these have a direct implication on cost and therefore the viability of the investment.
What are the main risks of investing in the country now and how are they likely to be ameliorated?
Risks present in the country are multi-pronged including technical, commercial and non-technical/non-commercial risks.
These risks are constantly assessed and a robust plan is developed and implemented to manage those risks. Fortunately, most of the technical and commercial risks are within our area of influence to manage and mitigate.
Rather worryingly now, we are seeing a steady rise in non-technical/non-commercial risks. These are essentially surface risks involving economic, geopolitics, security risks and other risks of which the causes are beyond our control. In these cases, mitigation focuses on minimizing the overall impact of the risk on our operations.
The Government of South Sudan is constantly assuring the oil and gas industry that everything is within control and we do see some positive steps and measures being undertaken by the Government of South Sudan in mitigating or avoiding those risks.
How does Petronas contribute to the local areas in which it works?
PETRONAS in South Sudan operates as a shareholder to the 3 Joint Operating Companies (JOC), namely DPOC, GPOC and SPOC. The bulk of the community contributions are carried out through these JOCs, and includes community projects like water distribution, community farming assistance and infrastructural works and infrastructural refurbishment projects.
At the PCNL level, we have implemented a number of Corporate Social Investments (CSI). We fully believe that education should be a priority and we have implemented 2 school refurbishment projects both in Juba and in other parts of South Sudan. We have also made contributions of a bus for students to the University of Juba.
Besides these, we have made various charitable donations and organized several events at local orphanages around Juba, in conjunction with Christmas. All our CSIs are always done in collaboration with many parties and with advisory from the Ministry of Petroleum.
Does Petronas have a local content plan, including training, hiring locals and using local contractors?
Our aspiration is to eventually have at least half of the PETRONAS workforce in South Sudan as South Sudanese. We currently have a total of 10 full time South Sudanese employees based in South Sudan. There are also 3 fulltime South Sudanese employees based in Kuala Lumpur.
To achieve this long term aspiration, we are looking at organic growth of the talent pool via training and scholarships and immediate recruitment. To date we have awarded scholarships to 77 South Sudanese including 23 students still in the midst of completing their studies in the Universiti Teknologi PETRONAS (UTP) in Malaysia. These students are expected to further add to the talent pool for the South Sudanese Oil and Gas Industry.
We have also successfully completed the training and graduation of 87 South Sudanese Production Operators and Technicians. These technicians completed 8 months of intensive training in Malaysia, followed by a year of industrial training in the DPOC fields.
We have conducted many training courses in collaboration with Nilepet and our PETRONAS Technical Training Centre. These courses include basics in petroleum economics, petroleum engineering and production. Finally, in the coming year, we may also be looking at the direct hiring of more South Sudanese talents into our workforce.
What will be the role of companies like Petronas and the energy industry overall in building the economy of South Sudan?
A very large portion of the economy of South Sudan still relies on the oil & gas industry. It is in the best interests of all parties involved if there is a strong, competitive, resilient and robust oil and gas industry in the country. We constantly welcome the participation and growth of well known service providers to increase the competition within the oilfield service providers and therefore the growth of the industry.
Besides this, we are also constantly exploring new technologies and the implementation of latest advancements. These technologies are important in the process of resuming production economically in GPOC, as well as to optimize and eventually increase production in DPOC.
How high are alternative export routes on the list of priorities for Petronas? What will likely be the next available export routes for South Sudanese oil?
There have been talks of various proposed routes, tying in through Uganda and Kenya and alternative routes through Ethiopia. At the current moment there are no plans to explore other export routes as these alternative routes also present other challenges and risks, thus reducing the overall economic viability of the routes mentioned.
We are encouraged by the on-going collaboration and understanding between the Governments of Sudan and South Sudan not only in ensuring the continued viability of the current export routes, but also in ensuring that all cross border challenges are managed accordingly to ensure mutually beneficial outcomes for all parties.
Is it viable for South Sudan to extend the value chain to the midstream and downstream? Could Petronas be involved?
Any further investment by other parties in the South Sudan oil & gas industry, be it upstream, midstream or downstream is very much welcome as it ensures the overall growth of the industry as a whole.
What is your outlook for operating in South Sudan in the coming months and years?
We remain cautiously optimistic based on the current developments within the country. In the meantime we continue moving forward with our plans to grow the industry, to optimize production for DPOC and to plan for the resumption of production for GPOC.