Page 7 - Downstream Monitor - MEA Week 34

DMEA Commentary DMEA Map source: ECOS
of the two consortia that are now responsible for 100% of South Sudan’s oil production. ( e other group is greater Pioneer Operating Co., or gPOC, which was founded by Chinese, Malaysian and Indian investors.) As a result, it is already in a position to make use of exist- ing production and transport infrastructure. is includes the landlocked country’s only oil export pipeline, which runs through neighbour- ing Sudan and terminates at a port on the Red Sea coast.
On this front, Block 3 is likely to bene t from the involvement of China national Petroleum Corp. (CnPC), which serves as operator of both DPOC and gPOC. e state-owned Chinese company has continued to work closely with the government of Sudan since 2011 and remains one of the largest investors in that country.
new possibilities
Even so, the small eld may help Juba forge its own path towards development that is not com- pletely dependent on foreign consortia led by Chinese investors.
Chuang expressed excitement about the discovery, which is the rst of its kind to have been made in South Sudan since 2011. He said it indicated that additional finds were likely, noting that South Sudanese geologists hoped to come across more oil in the Melut Basin and other parts of the country. “As of now, we are very excited ... [Within] some few weeks, exploration will be taken as a priority. We are going to move all over South Sudan,” he was quoted as saying by Reuters.
e oil minister also reported that the site would be connected to the nearby Paloch block, which is being developed by DPOC. He did not comment further, but South Sudan’s Information Minister Makuei Lueth said these links would play a crucial role in preparations for launching development work at the smaller eld.
“ is is a new discovery, and hence people will have to do so many things in order to get production,”hesaid.“[ enewdeposit]needsa pipeline to connect it to the main pipe.”
forging a path
e information minister’s statements indicate that Juba expects oil from the smaller eld to be loaded into the existing export pipeline that passes through Sudan on its way to the Red Sea coast.
But if the oil minister’s predictions of addi- tional discoveries in greater Upper nile are cor- rect, they could lend momentum to the South Sudanese government’s plans for opening up a new oil export route – especially if the national oil company (nOC) nilepet starts working with new partners. On the one hand, new elds could turn out more oil than the pipeline to Sudan could handle. And on the other hand, new inves- tors might not share CnPC’s interest in existing infrastructure. ey might prefer instead to back plans for exporting crude by pipeline via another neighbouring country such as Kenya.
If they do, South Sudan has a better chance of establishing itself as an oil producer in its own right, and not just as a spin-o from Sudan or a collection of assets controlled by CnPC.
However, Doug Rycro , commercial director at energy advisory practice gneiss Energy told DMEA: “Such hopes will have been dampened by the recent news that the developers of the Lamu Port-South Sudan-Ethiopia-Transport (LAPSSET) Corridor are around $24bn short in funding for the infrastructure project, which includes a pipeline that will export oil via Kenya’s Indian Ocean port at Lamu.”
He added: “With the timely completion of LAPSSET looking increasingly unlikely, if at all, Juba will need to nd alternative export options if it is to reach its targeted oil production level of 350,000-400,000 bpd.”™
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