South Africa signs oil deal in war-torn South Sudan

Tuesday May 7, 2019

Continent’s most industrialised economy considering $1bn investment

South Sudan oil minister Ezikiel Lol Gatkuoth hopes the deal will ultimately boost the country's output © Reuters

South Africa has signed a deal to explore for oil in South Sudan, as part of a potential $1bn investment that the petroleum minister in the war-torn east African country hopes will eventually help to boost production.

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The two governments on Monday signed a 6 year exploration and production sharing agreement for an untapped block in Jonglei state, just south of the current oil producing areas, oil minister Ezikiel Lol Gatkuoth said by phone from the capital Juba.

South Africa has committed to spending at least $50m on exploration and is interested in building a pipeline and a refinery that could see the it’s total investment in South Sudan reach as much as $1bn, Mr Gatkuoth said.

South Sudan is seeking to restore daily oil production to 350,000 barrels after a civil war and a disagreement with Sudan to the north disrupted oil operations and caused output to halve since 2012. South Sudan won independence from Sudan in 2011 but remains dependent on two 1,000-mile Sudanese pipelines to export the crude via the Red Sea.

The oil block is part of a larger area explored by France’s Total in the 1980s that was divided into three new licenses in 2012. South Sudan has sub-Saharan Africa’s third-largest crude reserves, according to the US Energy Information Administration, but only a third of the country has been explored.

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