New Oil Contract Points to S. Sudan Comeback
As the South Sudan government tries to raise production, a new player signs on with the promise of a $500-million investment.
South Sudan’s 2017 campaign to boost oil exploration and production is off to a running start. Nigerian upstream independent Oranto Petroleum announced today that it had signed an exploration production sharing contract (EPSA) in Juba for the reserve-rich Block B3 and that it would invest as much as $500 million in South Sudan, effective immediately. Oranto was among an elite cadre of upstream players vying for a chance to work in South Sudan’s prized onshore acreage. The EPSA is the first to be signed in South Sudan since 2012.
“We believe the petroleum resources of Block B3 are vast. To reach our target of more than double current oil production, we need committed new entrants like Oranto,” said Minister of Petroleum Ezekiel Lol Gatkuoth. “The government is working hard to reinvigorate the petroleum industry in South Sudan by creating an enabling environment for International oil and gas companies to invest and operate. It is up to the oil companies to come in, explore and produce.”
Oranto plans to complete an airborne geophysical survey, acquire and process 2D seismic, and assess existing data held by the government and former operators within the first three years. Oranto will also work with the partners of Blocks B1 and B2, which include Total, to explore the highly prospective area. Estimated oil reserves in place are more than 3 billion barrels.
“We believe the petroleum resources of Block B3 are vast. To reach our target of more than double current oil production, we need committed new entrants like Oranto,”
– South Sudan Minister of Petroleum Ezekiel Lol Gatkuoth
The Oranto announcement comes as the Government of South Sudan has magnified its commitment to attracting investment in its ailing upstream sector, especially by augmenting security for oil and gas installations amid continued internal conflict. Since installing the additional security forces in oil-rich areas, employees from the country’s long-time operators — China National Petroleum Corp., Malaysia’s Petronas and ONGC Videsh of India — have come back to the country. Oil production has restarted in Unity State, which has been heavily targeted by rebel factions.
Africa’s youngest country, which won its independence in 2011, South Sudan has struggled with rebel groups and internal fighting since 2013. Oil facilities have long been a 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. The country plans to double its oil output to 290,000 barrels per day this year.
Oranto is a newcomer to South Sudan but it has a large footprint of exploration and production acreage in Africa along with its sister company Atlas Petroleum International. Oranto will be the technical operator and will hold a 90 percent stake of Block B3. State-owned Nile Petroleum Corporation (Nilepet) holds a 10 percent stake.
“It’s an honor to formalize our entry into South Sudan with this EPSA,” said Prince Arthur Eze, Founder and Chairman of Oranto Petroleum in a statement. “Our company is at the vanguard of African firms exploring and developing African assets. This is the beginning of a long-term collaboration with Nilepet, the people of South Sudan and our partners to bring to light the immense potential of Block B3. Oranto is committed to an aggressive exploration work program that will benefit all stakeholders.”
“This is the beginning of a long-term collaboration with Nilepet, the people of South Sudan and our partners to bring to light the immense potential of Block B3. Oranto is committed to an aggressive exploration work program that will benefit all stakeholders.”
– Prince Arthur Eze, Founder and Chairman of Oranto Petroleum
Oranto’s B3 area covers 25,150 square kilometers and is considered highly prospective, with a “low risk, high reward” categorization. The totality of Block B is 120,000 square kilometers, but it was split by the government in 2012 into B1, B2 and B3. The area includes productive parts of the Muglad Basin.
South Sudan has proved reserves of 3.5 billion barrels of oil, with much of the country still unexplored. The government, led by President Salva Kiir, is keen to raise oil production. Since the drop in production and reduced global prices for oil, inflation in South Sudan has risen drastically, up 480 percent in December – the highest rate in the world. The currency has also struggled, declining in value by 800 percent in the last year. The United Nations and South Sudan declared a famine in the country’s northern region of Unity State in February, largely due to rebel fighting. News reports have indicated that London-based Tullow Oil and ExxonMobil are also interested in investing in South Sudan.
The South Sudan government will be represented at Africa Oil & Power 2017 by H.E. President Salva Kiir and H.E. Minister of Petroleum Ezekiel Lol Gatkuoth. Purchase your delegate pass to attend their speeches and our Market Spotlight: South Sudan session.