From Adversity, S. Sudan Aims High
Last week South Sudan’s finance minister revealed the government’s objective to more than double oil production in 2017/2018. Emerging from its turbulent past, South Sudan may re-establish itself as a major African producer and East Africa’s most prolific onshore play.
Though oil was discovered in South Sudan as early as 1978, decades of conflict have disrupted the development of the oil and gas industry. A referendum in 2011 that split South Sudan from Sudan endowed the resource-rich country with independence, but also a heavy burden of creating a working government, administering oil and gas laws and developing much-needed infrastructure.
Shortly after its independence from Sudan, South Sudan faced yet another struggle, as fighting broke out in 2013 between the government and the rebel group Sudan People’s Liberation Movement. Production facilities have been a continued target of the rebels. As a result, oil production fell from a peak of 350,000 barrels per day in 2011 to 130,000 bpd at the beginning of 2017.
Timeline of a New Nation
The Unity Field was discovered in the northern area of today’s South Sudan.
The government of Sudan revokes the South’s autonomy and civil war breaks out between the north and south.
Civil war makes oil and gas operations difficult; Chevron leaves the country.
The Greater Nile Petroleum Operating Company (GNPOC) is created. The company built the Greater Nile Oil Pipeline and it is currently the operator of Block 1. GNPOC is now owned by CNPC, Petronas, ONGC and the Sudan National Petroleum Corp.
The Comprehensive Peace Agreement is signed between the north and the south, promising South Sudan autonomy and the right to hold an independence referendum.
The Nile Petroleum Corporation (Nilepet), the national oil company of South Sudan, is incorporated.
South Sudan votes to leave Sudan and form its own country.
Production peaks at 350,000 bpd.
Fighting breaks out between the government of South Sudan and the SPLM. Civil war begins.
In August President Salva Kiir signs a mediated peace deal with the rebels and with Riek Machar, the rebel leader, who is to become vice-president.
Though Machar returns to Juba in April and is sworn in as VP, peace is short-lived, and Machar leaves in July amid further conflict.
South Sudan is one of 11 non-OPEC countries that pledges alongside the bloc to reduce production.
Finance Minister Stephen Dheiu Dau announces plans to increase oil production from 130,000 bpd to 290,000 bpd.
Despite the struggles, the young country has demonstrated its desire to successfully create a profitable petroleum industry. South Sudan has great potential for growth, with proved reserves of 3.5 billion barrels of oil, and much of the country left to explore. On Friday, 27 January 2017, Finance Minister Stephen Dheiu Dau announced a target to more than double production in fiscal year 2017/2018 (starting July) to 290,000 bopd.
In December last year, South Sudan played a prominent role on the international scene as one of 11 non-OPEC producers that agreed to reduce oil output in a bid to boost prices. In August, the government announced it planned to restart oil production in Unity State, after more than a year of shuttered operations there due to conflict with rebels in the north of the country.
New petroleum legislation – the Petroleum Act of 2012 and the Petroleum Revenue Management Act of 2013 – has been put in place to govern the industry. Though these laws are challenging to enforce now, as stability returns to South Sudan they are expected to become the framework for continued exploration and development. The Nile Petroleum Corporation (Nilepet), the national oil company, was incorporated in 2009 and holds interests in Block 1, Block 3, Block 7 and Block 5A. The CEO of Nilepet was fired in 2016, and replaced with new executives and advisors. Today, Asian companies are the primary stakeholders in the oil and gas industry, with CNPC, Petronas and ONGC the main actors in both the Unity State and the Upper Nile areas. Oil is exported via pipeline through Sudan for a fee, but South Sudan has explored alternative export routes through its neighbors Ethiopia and Kenya.
Africa Oil & Power 2017 will feature a market spotlight session on South Sudan’s oil and gas sector, with keynote speeches from H.E. President Salva Kiir Mayardit and H.E. Minister of Petroleum Ezekiel Lol Gatkuoth. View all our 2017 speakers and register for your delegate pass to attend the speeches and sessions.