South Sudan seeks funds to develop oil assets

Reuters, Thursday 22 Sep 2011

Government outlines a three-year programme to tackle infrastructure needs, including the building of an oil refinery

Oil refinery
General view of the Tema oil refinery near Ghana"s capital Accra (Photo: Reuters)

South Sudan is taking control of vast oil resources previously managed by the North but the poor, two-month-old state needs urgent funds to boost infrastructure, a top oil ministry adviser said on Wednesday.

"We could say that about 50 per cent of oil resources that were going to the North are southern assets and I can say that a greater part of this is coming to us now," Angelina Teny said in an interview on the margins of an energy conference in Ghana.

"Our resources are being managed from the South, although not totally -- but at least the (oil) companies are now beginning to move southwards," she said, adding the new government would soon establish a consortium to oversee oil production.

"But again, we should recognize that the South is starting from a bad situation -- we've been described by many as the least developed -- so despite these resources we'd still need huge support to make them useful to our people," she said on the sidelines of an African energy conference in Accra, Ghana.

Teny, adviser on petroleum matters to the Energy and Mines Ministry, led negotiations over the oil assets with the northern government in Khartoum. She said the new state already controls most of the oil fields.

"Two major blocks are entirely located in the South and about 65 per cent of the remaining are also in the South," she said of oil assets controlled by the new state.

She said output from "those fields that are producing" was around 300,000 barrels per day.

She said apart from embarking on a vigorous investment drive, there were plans to hold an international donors' conference.

The government had outlined a three-year development programme to tackle some of the infrastructure needs, including the building of an oil refinery for the domestic market, Teny said.

"Presently, we are importing oil products and its not easy having to import oil when you are a producer, but again it encourages us to think very fast in building a refinery to address domestic needs. That is being discussed and the government is very serious about it."

The government has also prioritised the enactment of a law to regulate the oil sector, Teny said, adding that work was almost completed and the law would soon be published.

She said in addition to the need for infrastructure such as roads and pipelines and huge service requirements, the South required capital towards meeting the Millennium Development Goals.

Teny said after initial hesitation, oil exploration companies were responding positively to Juba's control of the resources.

"They have started coming down South and we're beginning to talk," she said, noting that so far the new government had not awarded any new oil contract and that its priority was to review the existing contracts to ensure transparency.

She said there had been a general lack of information on the oil assets which made it difficult for Juba to assess reserves.

Teny said that currently there was virtually no economic relationship with the North and that Khartoum had closed major trading borders between the two sides, leading to a spate of business bankruptcies on both sides.

"The economic relationship between the North and the South at this point in time is a bit rough," she said.

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