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In 2018, South Africa agreed to invest $1billion into South Sudan’s energy infrastructure. The countries have now signed a new exploration and production sharing agreement (EPSA) for the Sudanese Block B2 oil field.

SA signs oil agreement with South Sudan

According to the agreement, Block B2 will be operated by the South African state-owned Strategic Fuel Fund (SFF), the Ministry of Petroleum and Nilepet, the national oil company of the Republic of South Sudan. The EPSA includes a six-year exploration period, during which the SFF and Nilepet will launch a comprehensive aero gravity survey exploration campaign, seismic acquisition and drilling of wells. The SFF will also invest in capacity building initiatives, training of South Sudanese citizens, investing in social and community development projects and ensuring local content and women empowerment.

“This is a brilliant deal and the future outlook for exploration in South Sudan and Block B is huge, with prospective resources into the billions of barrels of oil. The potential discoveries can be quickly and cheaply tied into existing infrastructure,” says NJ Ayuk, CEO of Centurion Law Group and the African Energy Chamber’s Executive Chairman.

He adds that the Chamber believes that the potential for large discoveries of oil and gas is immense in South Sudan, which remains largely under-explored despite already having proved oil reserves of 3.5 billion barrels. “New entrants like the SFF are key to ensuring socio-economic development in South Sudan and show the way for more investors to come,” Ayuk says.

South Sudan is an established, world-class petroleum producing region, whose territory includes a large part of the Cretaceous rift basin system that has proved petroliferous in Chad and Niger as well as Sudan. It currently produces 160,000 bopd, and aims to increase production capacity to 270,000 bopd by the end of the year. The country has the third-largest oil reserves in sub-Saharan Africa, estimated at 3.5 billion barrels, with just 30% of the country explored to date.

“The petroleum resources of Block B2 are vast. For South Sudan to reach its target of bringing back production levels of around 350 000 barrels of oil per day and beyond, we need committed new entrants like the SFF. South Sudan has great potential, yet our country remains vastly under-explored, and we believe the entry of new players like the SFF will lead to new world-class discoveries very soon given the aggressive exploration program and great petroleum viability of Block B3. This will support South Sudan’s economic revival and improve trade with other African countries,” says South Sudanese Minister of Petroleum Ezekiel Lol Gatkuoth.

“We are bullish about this strategic and unique opportunity into Block B2 with great petroleum potential. It provides South Africa with a chance to further strengthen its energy security while entering one of the top three most lucrative onshore oil and gas markets in Africa,” adds South African Energy Minister Jeff Radebe.

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