A Review of the Nigerian Energy Industry

Oil players ‘told to shut in’ at South Sudan field

South Sudan Oil
South Sudan Oil

20 May 2015, News reports – South Sudanese rebels have asked oil companies to shut in production at a key oilfield as clashes with government troops intensify, according to reports.
The rebels are said to be close to Paloch oilfield in Upper Nile State, having claimed to have captured Tangrial Bil, site of a proposed refinery, various news reports indicate.

Fighting has intensified between government forces and rebels in recent days before the request from the latter side to oil companies operating in the area was made.

“We have decided to take control of the oil fields and deny (President) Salva Kiir from using the oil revenues to perpetuate the war,” the Wall Street Journal quoted SPLA-in-Opposition spokesman James Gatdet Dak as saying

“We ask (oil companies) to start the process of closing down in a safe manner that will not damage the oil facilities and cause environmental damage.”

Reuters quoted the same spokeman as saying: “This is a matter of urgency! This is due to the ongoing clashes between our forces and pro-Salva Kiir troops near the oilfields.”

There is no indication, however, that oil companies have actually halted production at the field.

The Wall Street Journal quoted South Sudanese Information Minister Michael Makuei as saying: “I don’t think (the rebels) are that close. There is no cause for alarm, we shall bring the situation under control soon.”

China National Petroleum Corporation (CNPC), Malaysia’s Petronas, ONGC Videsh of India and South Sudan’s Sudapet operate in the area.

Blocks 1, 2 and 4, which straddle the Sudan and South Sudan border, are collectively known as Greater Nile Oil Project (GNOP). When South Sudan split from Sudan, blocks 2A, 2B and 4N were allocated to Sudan and blocks 1A, 1B and 4S to South Sudan.

CNPC has a 40% stake in GNOP, with Petronas on 30% and ONGC Videsh on 25%. Sudanese state player Sudapet has a 5% interest.

Despite numerous ceasefire agreements, Sudan and South Sudan have been in a state of almost perpetual combat since the latter split from the former in mid-2011, taking with it three-quarters of the original country’s oil reserves.

Fighting broke out in South Sudan’s capital Juba in mid-December 2013 after Kiir accused former vice president Riek Machar of plotting a coup – something the latter denied.

Feuding quickly spread to other states, forcing the world’s newest nation to shut in about one fifth of its production.

Peace has largely reigned in the oil-rich nation, however, following a truce agreed in late January 2014 in Ethiopia.

Khartoum relies heavily on revenues from oil production in South Sudan, which must use its neighbour’s midstream and port infrastructure for exports.

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