SA, South Sudan sign six-year oil production sharing agreement

South Sudan and SA on Monday signed a six-year production-sharing agreement for an untapped exploration block in the East African country, where production has been hit by civil war.

The exploration production sharing agreement for Block B2 was signed by minister of energy Jeff Radebe and Ezekiel Lol Gatkuoth, South Sudan’s minister of petroleum, a Reuters reporter at the ceremony said.

Radebe said the South Africans had committed $50m for exploration. SA was also interested in building a pipeline and refinery, he said, bringing their total projected investment to $1bn, according to memorandum of understanding signed in November.

Block B2 was once part of a 120,000km² area known as Block B, which was divided into three licences in 2012 and is thought to be rich in hydrocarbons although very little drilling has been done there.

The block lies in greater Jonglei state. South Sudan became the world’s youngest country after it split from Sudan in 2011. It has one of the largest reserves of crude in sub-Saharan Africa, only a third of which have been explored.

But production plummeted when civil war broke out two years after independence. A September peace deal is largely holding but a plan to form a unity government by May 12 has been delayed.

In April, Awow Daniel Chuang, director-general for petroleum at the ministry of petroleum, said production was expected to reach about 195,000 barrels a day by the end of the year, from 175,000 at present, and rise to 220,000 barrels a day by early 2020. The government has said production would reach pre-war levels of 350,000 to 400,000 barrels a day by mid-2020.

More than 400,000 people died in South Sudan’s civil war, which displaced around a third of the country’s 12-million population and led to famine in parts of the country. 

Reuters