South Sudan targets oilfield security ahead of restoring production

South Sudan's Minister of Petroleum Ezekiel Lol Gatkuoth speaks during a Reuters interview in his office in Juba, South Sudan, October 10, 2017. REUTERS/Jok Solomun

JUBA (Reuters) - South Sudan is tackling the chief obstacle to new investment in its oil sector - security - as it aims next year to restore production to the level recorded before war broke out in 2013, the oil minister said on Tuesday.

“Security is now under control, and those investing will be provided with security,” Minister Ezekiel Lol Gatkuoth said in an interview in the South Sudanese capital Juba.

High hopes for the fledgling oil sector of the world’s youngest nation evaporated when conflict erupted, forcing oil firms to shut in crude and cutting production to 130,000 barrels per day (bpd).

The country has sub-Saharan Africa’s third-largest reserves and is the only mature oil producer in East Africa. But it is embroiled in a war that has forced a third of its population to flee, creating Africa’s biggest refugee crisis since the Rwandan genocide.

All but one oil asset, the Melut Basin project, remain shut in due to conflict.

But a security force comprised of soldiers, national security officers and police was deployed this year to the Melut Basin. It is operated by a consortium including China National Petroleum Co and Malaysia’s state-run oil and gas firm Petronas.

The minister said this deployment showed the government’s commitment to ensuring oil companies are provided with security which is critical to securing investments badly needed to boost production and government revenues.

“Resumption of production ... back to where it used to be, increase in production and exploration in certain areas, these are our priorities,” he said.

Giving a more modest target than other officials have this year, he said production would reach 150,000 bpd by the end of 2017 after output is increased in the Melut Basin.

“Next year it will reach 200,000 (bpd),” he added. Output had reached about 245,000 bpd before the war.

On Wednesday, Juba will host executives from French oil major Total and nearly a dozen other oil companies for a conference to bring new investment.

That could still be a hard sell to firms such as ExxonMobil, which the minister said shunned his offer to take a stake in a block in what the government says is its biggest untapped oil deposit.

The United Nations says South Sudanese soldiers have committed violations against civilians that may amount to war crimes, charges the government says are baseless.

Gun battles in Juba in July 2016 ended a fragile peace process, and the most powerful rebel figure - the former vice president - is under house arrest in South Africa.

As recently as March, rebels kidnapped four oil workers including a Pakistani national in a bid to force their Chinese and Malaysian consortium to leave the country.

THIRD-PARTY SECURITY

The government is talking to private security firms who are preparing options for “third-party security” for existing oil projects, the minister said.

He said the government had no objection to private firms assisting with security in the oilfields, for example by securing “base camps” inside installations for companies.

This would complement the presence of government forces that will be deployed to the other oil projects once production there is restored.

“The companies have the right to bring anybody that will make them have peace of mind,” he said, adding that operating companies would likely directly contract those firms once production resumed.

Other firms that had produced oil before the conflict include India’s ONGC Videsh. In March the government granted a license to Nigerian firm Oranto to explore and it recently approved the company’s seismic plans, the minister said.