In the wake of peace talks in Addis Ababa last week and progress towards a settlement, what next for South Sudan’s oil and gas industry and its investors?
South Sudan’s promise, as yet, remains unfulfilled. For East Africa’s sole petroleum exporter and potentially Sub-Saharan Africa’s third biggest oil producer, a vacuum of technology and investment has led to production declines and a sector at a standstill. Now we have a moment where we can seize the opportunity to build a renewed energy business with our international partners. This government and the Ministry of Petroleum pledges not to let that moment pass.
Around four fifths of our nation is at present unexplored. Outside the main northern production areas operated by the three joint operating companies, South Sudan has an enormous expanse of land that is open to petroleum explorers. In addition to the oil and gas sector, investors in mining, fisheries, agriculture, hydropower, transport and telecoms will find an abundance of opportunities all over the country. Within Africa, South Sudan is still a frontier for many industries.
The security situation is incrementally improving, as present investors in the country can testify, with serious intent among all actors to make peace work. In recent months the government finished security surveys on the production areas managed by Greater Pioneer Operation Company and Sudd Petroleum Operating Company. With the ‘all clear’ given, the companies are preparing to go back to the oilfield and resume production. This reset of the industry gives us a valuable opening to introduce advanced technologies. Production at our fields uses the most basic extraction methods. But with reserves and potential production volumes (as well as extraction costs) rivaling producers in the Middle East, we should be using the most advanced technologies. Just resuming production will not suffice. We must make more of our resources, with global best practice in production optimization as our standard. An excellent starting point will be to improve our reservoir management systems, reduce the water cut from our wells and bring production costs down even lower.
Gas utilization, gas-fired power generation, fertilizer plants and refineries are key ways that we can make even more of our resources. We are proud to see South Sudanese companies and joint ventures leading the charge to build midstream, downstream and power sectors that are a foundation for growth, and a catalyst for other parts of the economy. International companies will also be key to putting our energy sector on a secure footing. The Ministry of Petroleum is pleased to see oilfield services company Schlumberger restructure its operations so that its Juba office is directly overseen by its Kuwait branch, demonstrating the importance of South Sudan as a major oil producer on a par with North African and Middle Eastern producers. We expect such measures from our international colleagues in Juba to lead to greater streamlining and efficiency, and hence the quicker application of new technologies.
The national oil output target is 1 million barrels per day within the next five years. Ambitious, but with the resources in place and the infrastructure deficit we face, it is a reachable target, and in fact a necessary one. We call on the investment community and oil and gas specialists such as Schlumberger to redouble their efforts and help us realize this goal.
The government of South Sudan and the Ministry of Petroleum are bullish on South Sudan’s future, and on the improving economic and security situation all over East Africa. Our people want to move forward and prosper. We offer the assurance that explorers, producers and builders of infrastructure can operate unhindered by security concerns. This will enable investors to produce real value for their companies and for the people of South Sudan.