17 October 2017

South Sudan: Total Exploration Licences Could Be Revoked As Firms Delay Start of Operations

Photo: Charlton Doki/IPS
Oil storage facilities at Bentiu, Unity State, South Sudan.

As South Sudan seeks investors in oil exploration following the mapping of several blocks, the country has said it will revoke the licences of firms that have failed to carry out their mandate -- terming the companies as "vultures."

The government is currently at loggerheads with French company Total SA, which it accuses of using the licence for Blocks B1 and B2 for trading to raise funds, yet they have failed to commence exploration.

The EastAfrican has established that the South Sudan government has summoned executives from Total to a meeting in November to discuss the status of the company's licence, which it is considering revoking if the company does not provide a concrete exploration plan.

The meeting will be the latest of many that the two parties have had over Block B, which was divided into three portions in 2012, and is believed to have significant deposits.

Total was awarded the licence for the exploration of the blocks in 1983, and has cited insecurity as the reason for failure to commence operations.

However, Minister for Petroleum Ezekiel Lol Gatkuoth said the government has restored security.

"Since 1983, Total has been citing insecurity but that is no longer an issue. We are telling them to start working," Mr Gatkuoth said.

Government officials say that more than three quarters of South Sudan territory is floating on oil and gas and minerals like diamonds and mercury, but only a third of the crude oil is being exploited.

The government is now mapping of areas with crude potential, and has already created new blocks to license to investors.

Unlike previously when South Sudan issued licences for huge exploration fields, the government has resized areas with crude potential into smaller blocks in order to have as many companies as possible exploring.

South Sudan has also come up with tough conditions under the Petroleum Act of 2012 designed to ensure all exploration and production sharing agreements (EPSA) signed with foreign firms compel them to carry out exploration activities.

The country is currently seeking to attract foreign companies to undertake exploration in seven blocks, and has committed to award licences based on an open and fair bidding process to firms with technical competence, adequate experience, compliance history and sufficient financial strength.

"Unlike most jurisdictions, South Sudan's framework is homogenous. The Petroleum Act clearly spells out all that is required and there is comparatively less bureaucracy and greater ease of doing business," said Adaku Ufere, the energy practice leader at Centurion Law Group.

Early this year, South Sudan signed the first EPSA since attaining Independence, with Nigerian company Oranto Petroleum International for Block 3B. The company committed to invest $500 million in exploration activities.

South Sudan is also in negotiations with Spain Oil Corp for Block E2 and other potential investors.

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