By Ater Yuot R. Amogpai
Oil exploration in Sudan was
first initiated by Italy’s Agip, France Total, and Dutch Shell oil companies in
the red sea region but they were not successful in their exploration efforts.
After the end of the first civil war in 1972, the American oil company Chevron
was granted concession in the southern regions of Sudan.
The first oil fields in South
Sudan were discovered at the region of Bentiu but Chevron suspended its
operations in February 1984 as the second civil war erupted in South Sudan in
1983. In1994, the Canadian Arakis Energy Corporation started operated in the
Sudan oil industry. In 1996, Arakis sold 75% of its shares to the China
National Corporation Petroleum Company (CNPC).
The oil production started with only
2000 barrel/day in 1993 and increased to more than 434,000 barrels/day by the late
of 2006. Oil production peaked up at an average of almost 500,000 barrels/day
in 2007. This by then made Sudan the Africa’s fifth largest oil producer.
Greater Nile Petroleum Operating
Company (GNPOC) began to build a 1,540 km oil pipeline, which started in 1997
and completed by 1999 from the oil fields inside South Sudan to a marine export
terminal on the Red Sea (Port Sudan). From 2006 the Thar Jath oil field south of
Bentiu began exporting oil through the GNPOC pipeline. A pipeline (1,400 km) from Adar
Yale oil field through Paloch and the Central Processing Facility (CPF) in Al
Jabalayn (Sudan) to Port Sudan was constructed between 2004 and 2006.
After independence by 2011, South Sudan holds more than 75% of the total
oil reserves of the previous Sudan. However, South Sudan remains and still in
need of Sudan oil infrastructures facilities and ports in order to export its
crude oil to international market. New consortia (operating companies) were
formed for oil production and further exploration. South Sudan created Nile
Petroleum Corporation (NILEPET) to replace Sudan Petroleum Corporation (SUDAPET)
in the consortia. With Dar Petroleum Operating Company (DPOC) operating in Northern
Upper Nile State, Sudd Petroleum Operating Company (SPOC) and Greater Petroleum
Operating Company (GPOC) are operating in Ruweng state and Northern Liech state
respectively.
At the present, the CNPC,
PETRONAS Malaysia, India’s Oil and Natural Gas Corporation (ONGC) are the major
oil producers in South Sudan. NILEPET is the only state owned company
represented in the oil industry with a limited function of recruiting nationals
into oil operating companies (DPOC, GPOC, and SPOC).
Before 2013 crisis, the oil
production stands at around 250,000 barrel/day in South Sudan. 200,000
barrel/day produced by block 3 and 7 Melut Basin Oil field in Northern Upper
Nile State and the rest of 50,000 barrel/day produced by block 1 in Ruweng
state and Northern Lich state.
After crisis, production dropped
to 160,000 barrel/day. Ruweng state and Northern Liceh state oil fields are not
any longer operational. The current and only operating field is Melut Basin Oil
field Northern Upper Nile state. At the moment, block 3 & 7 is producing
around 125,000 barrels/day. This amount is decreasing month by month despite of
many efforts introduced to increase it.
Oil industry in South Sudan is
faced with many serious challenges. The country national budget is badly dependent
on oil revenues, making it the most oil dependent country in the world. Current
oil facilities are aging, for instance, in block 3 & 7, water cut out of
total gross production stands at 77%, and that by end of the year 2020 this
rate will reach 90%. Operation is still being disturbed by rebels and this
makes security of oil operation in Block 3 & 7 extremely important.
The most challenge factor to the future
of oil industry in South Sudan is the management of its operations. Since 2012,
the managing company of oil industry (NILEPET) focuses on downstream, the sale
and commercialization section of oil products and ignored the exploration and
production (E & P) section. This technical section of the industry is the
core of the oil industry in South Sudan and should be understood this industry
to flourish. Focusing only on cashing and ignored the core technical part of
the industry may lead to a serious mismanagement phenomena known as kleptocracy.
A phenomena if not seriously and well address could nominate collapsing of oil
industry in South Sudan as a great potential. Thus, the oil industry in South
Sudan would be discussed as part of the event that occurred and ended sometime.
Share negotiation with major
contributors, CNPC (41%) and PETRONAS (40%) should continue to raise NILEPET
current share 8% for example to 15%. It is then recommended that talented South
Sudanese with technical qualifications (engineers, geologies, technicians,
etc.) are to be trained and gradually to take over critical responsibilities
especially in E & P section. This could be the beginning to South Sudan to start
establishing her own operating company by South Sudanese when put the national
interest of our country first.
The paper is also intending to
achieve, low ostentatious spending, government trust, tax money spend wisely, giant saving, invest before spending and long term plan. The current and
successors NILEPET managements are advised to start the initiative and improved
production and operations of oil industry in South Sudan for public high gain
by considering the following points:
-
Trust to be maintain that money is
not going to be mismanaged
-
Investment in public projects such
as, roads, schools, hospitals, etc.
-
Saving and reduce unnecessary
spending
-
High levels of trust make economic
growth easier and created homogeneous society
- Oil will run out therefore, other
sources of income need to be introduced by investing in commodity rather than
oil such as agriculture and mining
- Current oil facilities are aging,
new facilities to be built such as refineries, wells, pipelines, technology
change
-
Spending on research, training and
development of South Sudanese to oil industry
The historical review and challenges
of oil production and operations in South Sudan might not be news to other
readers. The solutions mentioned above to overcome the challenges facing oil
industry will sustain the operations of oil industry in South Sudan. Sharing
such discussion will make information on oil industry public with high trust. Last
and not least we need to ask ourselves this question: what are we doing in oil industry but not what are we getting?
Ater Yuot Riak, (Ph.D.)
Leading Energy Expert
Mob: +211920002329
