South Africa signs oil exploration deal for Block B2 in South Sudan

South Africa’s state-owned Strategic Fuel Fund has entered a six-year exploration and production sharing agreement (EPSA) for Block B2 in the Muglad Basin in South Sudan.

The inter-governmental agreement will allow the firm to operate the block, which is rich in hydrocarbons.

The deal is part of South Africa’s $1bn broader investment in the country’s petroleum sector in order to secure affordable energy supplies.

The EPSA is the second such agreement since South Sudan gained independence in 2011.

According to South Sudan Petroleum Minister Ezekiel Lol Gatkuoth, the agreement will help the government to push towards restoring production levels to 350,000 barrels of oil per day (bopd) and beyond.

South Sudan is looking to attract foreign investments in the country’s energy sector.

Gatkuoth said: “The petroleum resources of Block B2 are vast. 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.”

French energy giant Total held a licence for the 120,000km² block B. The company stopped activities in 1985.

In 2012, the South Sudan Government split the block B area into three licences, namely B1, B2 and B3.

The government pulled out of talks over an EPSA with the French firm regarding the development of B1 and B2.

South Sudan’s national oil firm Nilepet also owns a stake in Block B2. SFF will work with Nilepet to perform a series of activities, including a comprehensive aero gravity survey exploration campaign, seismic acquisition and drilling wells.

In a release distributed by APO Group on behalf of South Sudan Ministry of Petroleum, South African Energy Minister Jeff Radebe said: “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.”

Furthermore, the African nations are in negotiations to establish a 60,000bpd refinery to supply oil products to the domestic market in South Sudan, as well as export to Ethiopia and other neighbouring countries.