South Sudan expands oil search with second exploration agreement since independence

South Sudan, which broke away from Sudan in 2011 has Africa’s third-largest oil reserves . AP

South Africa’s state-owned Strategic Fuel Fund signed an exploration and production sharing agreement (EPSA) for a hydrocarbons block in South Sudan as part of a broader $1bn investment plan for the country's energy sector.

The South African firm will operate Block B2, alongside the South Sudanese petroleum ministry and the country’s national oil company Nilepet.

This is the second such agreement for South Sudan since gaining independence from Sudan in 2011.

“The petroleum resources of Block B2 are vast. For South Sudan to reach its target of bringing back production levels of around 350,000 barrels of oil per day (bopd) and beyond, we need committed new entrants like the SFF,” South Sudanese petroleum minister Ezekiel Lol Gatkuoth said.

South Sudan, which has one of Africa’s largest oil reserves, is now courting investors to commit up to $3bn to develop its energy sector following a peace deal struck with rival factions last year. The world’s youngest nation has sub-Saharan Africa’s third-largest oil reserves at an estimated 7 billion barrels, with only 30 per cent of the country explored. South Sudan currently produces below capacity at 165,000 bpd after a two-year civil war devastated oil facilities.

The exploration and production sharing agreement with SFF includes a six-year exploration period. The South African firm will, alongside Nilepet, conduct aerogravity surveys that use plane-mounted sensors to locate hydrocarbon deposits underground, as well as seismic data to identify liquid and gas deposits, and drilling wells, the ministry said in a statement.

The entry of players such as SFF will lead to new "world-class discoveries very soon”, said Mr Gatkuoth.

"This will support South Sudan’s economic revival and improve trade with other African countries,” he added.

The agreement follows an earlier pledge by the South African energy ministry to invest $1bn in the South Sudanese petroleum industry, in order to ensure security of supply for South Africa. Talks are also underway between the two sides to set up a 60,000 bpd refinery in South Sudan, which could export product to neighbouring Ethiopia as well as other surrounding states.

The announcement follows investment roadshows by South Sudanese energy and industry delegations to Washington, Dubai as well as Johannesburg to attract development in the country.

In an interview with The National in April, Daniel Chuang, South Sudan's director general for petroleum authority Awow, said the country's production capacity would exceed 190,000 bpd by year-end. The ministry is launching its first-ever geological survey to map out concessions with the aim of launching its first-ever licensing round next year.