AfDB to help streamline South Sudan’s oil sector

As South Sudan works to increase its oil production beyond the current 150,000 barrels per day, it has enlisted the help of the African Development Bank’s African Legal Support Facility in fixing the sector.

It is for this reason that on July 31, the National Petroleum and Gas Commission of South Sudan and AfDB picked Johannesburg-based Centurion Law Group for a one-year project to review the country’s oil laws and build capacity for its oil agencies.

“We can expect a full review of South Sudan’s Exploration and Production Sharing Agreements framework and model, with South Sudan officials trained on negotiating such agreements,” said Centurion chief executive NJ Ayuk.

Mr Ayuk said that besides building confidence in South Sudan, the review will help to attract more investment and strengthen relevant bodies including the petroleum and gas commission. The review will also see an increase in exploration activity and technology use as well as the establishment of a local content policy.

It comes at a time when South Sudan is working on reaching its pre-war production targets of 350,000 barrels of oil per day. With total proven reserves of 3.5 billion barrels — the third largest in Africa — but with 70 per cent of the vast country unexplored, there is potential for more, which requires strong laws and a regulatory regime.

“We do not see South Sudan as an industry that needs to be improved but one that needs to build a brand new future for itself. South Sudan is East Africa’s most mature producing province, but it is also the newest, institutionally-speaking,” said Mr Ayuk.

This is perhaps where the Petroleum and Gas Commission comes in. It has the mandate to provide general policy direction on petroleum resources, supervise petroleum resource management, approve petroleum agreements on behalf of the government and ensure that they are consistent with the country’s laws.

Also coming in for scrutiny will be Nile Petroleum, which is charged with the management of the country’s resource. In its 2018 report, industry watchdog Global Witness said South Sudan’s elites had captured Nilepet, which they argued operated “almost entirely unregulated.”

Global Witness says that as of March 2016, Nilepet had received nearly $4 billion in oil advances from various foreign sources, and the cost of these loosely regulated oil advances would burden the country for a long time.