South Sudan Set To Take Over China-Operated Oilfields By 2027

South Sudan’s state-controlled Nile Petroleum Corporation (Nilepet) has started preparations to take over the management of some oilfields in the country by 2027, when it will let the contract with China National Petroleum Corporation (CNPC) as operator expire, Nilepet’s managing director Chol Deng Thon Abel told Bloomberg in an interview published on Wednesday.

CNPC leads one of the two main operating consortia in the country, Dar Petroleum Operating Company. The other members of the Dar Petroleum consortium – Malaysia’s Petronas, China’s Sinopec, and privately owned Tri-Ocean Energy – are also set to leave the blocks in 2027, Nilepet’s top executive told Bloomberg.  

The consortium operates in two blocks in the Upper Nile.

South Sudan, reeling from years of civil war, the previous oil price crash, and the latest coronavirus crisis, now aims to boost the state’s participation in the oil industry as it needs more oil revenues.

South Sudan broke from Sudan in 2011 and took with it around 350,000 bpd in oil production. After South Sudan’s secession from Sudan, the two countries have been mutually dependent on oil revenues because the south has 75 percent of the oil reserves, while the north has the only current transport route for the oil to international markets.

But then civil war in South Sudan broke out in 2013, which further complicated oil production. The oil price crash the following year additionally affected oil income for the ravaged economies of both countries.

Currently, South Sudan pumps around 170,000 barrels of oil per day (bpd), and it aims to grow its production in the future.

However, the country has struggled to increase oil production due to the crash in demand with the coronavirus crisis. Fears of the pandemic spreading have also delayed the commissioning of South Sudan’s first refinery in Sabinat, which at a mere 8,000-bpd capacity could substantially improve oil products’ availability.

By Tsvetana Paraskova for Oilprice.com

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