South Sudan has invited companies to bid for Blocks B1 and B2 directly, following the breakdown of discussions with other companies, including Total. The country, in a statement on April 24, appeared to have been dissatisfied with the slow pace of development.
Talks had been held with Total, Tullow Oil and Kuwait Foreign Petroleum Exploration Co. (KUFPEC). However, the statement said discussions had foundered on the proposed exploration period and cost recovery limit. The country went further in terms of talks with Total, saying negotiations had broken down owing to “irreconcilable differences”.
“Following lengthy discussions with representatives of the company Total, we have decided it is in the best interest of South Sudan to open opportunities to other potential investors,” said South Sudan Minister of Petroleum Ezekiel Lol Gatkuoth. “We had hoped for a favourable outcome but we believe these large and highly prospective blocks need a fast and ambitious development programme to achieve their full potential. B1 and B2 are now open for direct negotiation.”
The two blocks, B1 and B2, were initially part of Block B, which covered 120,000 square km. Total had held the licence for Block B for a substantial time under force majeure. In 2012, the block was divided into three, with the 25,150 square km B3 going to Nigeria’s Oranto Petroleum in March of this year. B3 has estimated reserves of more than 3 billion barrels, the statement said.
“The resource base in these blocks [is] enormous and we need committed operators who are ready to invest and work with our government to comply with the laws of our country,” said Gatkuoth. “South Sudan is creating an enabling environment for companies to operate. We want companies to invest, explore, produce and we are ready to offer incentives to investors.”
The statement went on to say it had taken a “very pro-business stance”, with the intention of using investments in the hydrocarbon sector to stimulate the economy. Current production in South Sudan is 130,000 bpd, it said, but it has capacity of as much as 500,000 bpd.
Given the difficulties of operating in South Sudan, Juba may struggle to sign up interested parties. The country is in the grips of a civil war and famine, while the political outlook is highly uncertain.