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.
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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