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Sudan Tribune

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South Sudan expects new oil finds to boost its economy

January 13, 2011 (KHARTOUM) — South Sudan government expects that new oil finds in the region by European operators would increase its revenue and help to cover important expenditures for the new state which might proclaim its independence next July.

Production platform in the Heglig oilfield (UNDP)
Production platform in the Heglig oilfield (UNDP)

The semi-autonomous region is conducting nowadays a referendum on self-determination which would lead to the establishment of a new African state devoid of infrastructure and ravaged by war.

The French oil company Total SA (TOT) and Spanish Star Petroleum will start oil exploration next March in two blocks located in Jonglei state, the southern Sudan oil minister said.

“One is Bloc B, the biggest in southern Sudan, to Total. They will start exploration in March. And another bloc is Bloc E with Star Petroleum, a Spanish company,” said minister Garang Diing to the Agence France Presse.

“We estimate that these two blocs have huge reserves which could allow us to add three times the current production to reach maybe two million bpd around 2014 to 2015.”

The minister estimated the South produces 450,000 barrel per day.

In 1983, Total had to interrupt its activities in the Bor Basin Block B acreage where they operate with Kuwaiti and American funds. After the 2005 peace agreement, the French firm had to prove its rights and defend its concession as a UK company White Nile (WNK.LN), started working on the ground with the support of Juba.

However in July 2007, the national oil commission stated in favor of Total, but the latter was not ready to start as its American partner the Marathon Oil Corp. (MRO) had been forced to withdraw from the project due to the economic sanctions imposed on Sudan in 1997.

An Emirati investor Mubadala company showed interest, but nothing materialized as Juba wanted, at the time, to involve a Spanish company, Star Petroleum in the consortium but Total was reluctant to associate its self with the Iranian owner of the latter.

Now, Qatar Petroleum Company is suggested by the French firm but Juba didn’t give its approval for the 20% percent stake.

Total has operating rights for the block with a 32.5 percent stake, Kuwaiti Kufpec Sudan Ltd 27.5 percent and state-owned Sudapet has 10 percent, the southern Sudan government owned Nilepet 10%. After the southern Sudan independence Nilepet or the structure that should be created will get 20 percent.

Total expressed readiness to resume activities once the new state had confirmed its rights. However a spokesperson from the French company added that some outstanding problems needed to be settled first.

“There are some preconditions, which are security guarantees for the operations on the ground, as well as the enforcement of our standards in environmental matters, ethical behaviour and transparency, and the reorganisation of the consortium following Marathon’s voluntary withdrawal.”

Last July, Sudanese oil minister Lual Deng Lual in an interview with Sudan Tribune disclosed that local communities ask for compensations, services “etc to the extent that these moves lead to either shelving some expansion plans or worse production stoppage”.

Oil minister Diing said they want Total brings new standards and knowhow to the oil sector in South Sudan dominated by Asian companies accused of not observing environment and security norms.

“We need to diversify the capital from some Asian — China, Malaysia and India — especially to get Western experience, the best technologies and the best practices,” the minister said.

NEW PIPELINE

Diing also expressed hopes that a big find by Total would also help the south to reduce its dependence on the north — its sole existing pipeline goes to Port Sudan.

“We have that thinking that Bloc B is very far from the pipeline. If there is a big discovery, we might need another pipeline to east Africa,” he said, adding that that could go to Lamu on the Kenyan coast or to Uganda, where Total has existing operations.

“We should have options … This is an issue taken seriously by the authorities,” Diing said.

Minister Lual who professed a rare support for the unity of Sudan, was not favorable to the idea of a new pipeline saying it was “uneconomical and expensive”. The cost of the pipeline project is estimated at $1.5 billion.

(ST)

10 Comments

  • Victory
    Victory

    South Sudan expects new oil finds to boost its economy
    hey readers:
    I would suggest that south Sudan should enter into deal with the New western oil companies to build the pipelines and refiners ,then later on they can pay the money in a number of installments as the amount has be estimated to be around 1.5 billion $,so that we will not depend on north to transport our oil as north is known as a great thief…what do you think?long live south Sudan.

    Reply
  • Anyang
    Anyang

    South Sudan expects new oil finds to boost its economy
    Absolutely Victory! That’s only the most viable path to take, therefore I think, we must all urges our government both federal and state’s representives to do acts before it’s too late.

    Reply
  • hard liner
    hard liner

    South Sudan expects new oil finds to boost its economy
    Dear Fellow southerners,
    All opinions, suggestions and ideas counts, so please discuss and brainstorm i am reading and will make summary and coments later thanks pals…!!

    Reply
  • Tambura
    Tambura

    South Sudan expects new oil finds to boost its economy
    What is next July, is it like that? We don’t have to trust northern, history teaches us that they can change their mind anytime . We just have to build our pipe and keep using northern one.

    Reply
  • Facts Check
    Facts Check

    South Sudan expects new oil finds to boost its economy
    Lual Achuek…they new nyagat of South Sudan independence…he should be shipped away by the security if he cast the wrong vote!

    Reply
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