Oil-rich South Sudan to resume production in war-hit region

A worker walks by an oil well at the Toma South oil field to Heglig, in Ruweng State, South Sudan August 25, 2018. Picture taken August 25, 2018. REUTERS/Jok Solomun
Updated 31 August 2018

Oil-rich South Sudan to resume production in war-hit region

JUBA: Emboldened by a new peace deal, civil war-torn South Sudan said that it will resume oil production in a key region next month to make up for more than $4 billion of revenue lost during years of fighting.
South Sudan, with Africa’s third-largest oil reserves, will renew drilling in northern Unity State for the first time since the fields were destroyed when the conflict began in late 2013, oil ministry officials told The Associated Press.
The goal is to have all five locations there operational by the end of the year and working alongside the oil fields in Upper Nile State, which operated throughout the civil war.
South Sudan’s economy is almost entirely dependent on exports of oil from its 3.5 billion barrels of reserves. Most of the oil rigs were shut down or destroyed by the civil war. The fighting that killed tens of thousands of people has also devastated the economy and sent prices for everyday items soaring.
Oil was central to South Sudan’s potential when it won independence from Sudan in 2011. In the seven years before the civil war began, oil brought in more than $13 billion in revenue, according to the finance ministry.
South Sudan’s government is optimistic about the resumed production, even attributing the peace deal signed early this month to the country’s reserves.
“Without oil there probably wouldn’t be peace right now,” Awow Daniel Chuang, the oil ministry’s director-general, told AP.
However, that peace is fragile. This week South Sudan’s opposition briefly refused to sign the final peace agreement because of outstanding issues. It accused the government of using oil revenues to buy weapons, ammunition and politicians to undermine the peace, said opposition spokesman Mabior Garang de Mabior.
The goal of resuming oil production in Unity State is to help increase South Sudan’s total output of 130,000 barrels per day to almost 300,000, which could bring in about $5 billion over the next few years, Chuang said. Another part of the goal is increasing Upper Nile State’s output to 200,000 barrels per day.
The new peace deal was brokered by Sudan, which has a vested interest in its neighbor’s oil production. As part of the initial agreement when South Sudan gained independence, Sudan was entitled to more than $3 billion of oil revenue, $1.2 billion of which is still owed, South Sudan’s oil ministry said.
The government also hopes to attract investors during the second local Africa Oil & Power conference in November in the capital, Juba.
While industry experts say that the prospects look promising, some say efforts will be futile if the fighting resumes.
“There is enormous pressure to ensure that the peace deal holds and that Sudan and other neighbors play a big role in enforcing and ensuring peace,” said NJ Ayuk, founder and CEO of Centurion Law Group and chair of the African Energy Chamber of commerce.
Currently there’s great interest from Asian, African and Eastern European countries looking to “defy the odds” and operate in a difficult environment as there’s still a lot more oil to be found in South Sudan, he said.
At least one oil group said that it feels confident the situation in northern Unity State is secure enough to resume production.
“We’ve been to the field many times and have done assessments and there have been no incidents. Peace has come,” said Angelo Chol Dongway, vice president for the Greater Pioneer Operating Company, a consortium of four oil companies licensed to operate there. They are the China National Petroleum Corporation, India-based Oil and Natural Gas Corporation, the Malaysia-based Petronas and South Sudan’s state-owned NilePet.
Other international investors aren’t as convinced.
“It sounds hopeful but internal politics, legal and economic stability have to be demonstrated,” said an oil industry consultant for a large company who spoke on condition of anonymity because the consultant wasn’t authorized to speak on the record.
South Sudan’s oil sector has faced scrutiny by the international community for its alleged lack of transparency and use of state oil revenue to fuel the civil war.
Earlier this year the US government placed sanctions on 15 of South Sudan’s oil-related entities, including NilePet and the oil ministry, in an attempt to stem the flow of “corrupt official actors” using revenue to buy weapons and fund militias.
Some advocacy groups worry that the increased production could bring more corruption.
“Without stringent processes of accountability, well-connected politicians and their commercial collaborators are likely to cart this money away,” said Brian Adeba, deputy director of policy at the Enough Project, a Washington-based advocacy group.
“This corruption in turn becomes an incentive for more violence against the state as aggrieved groups seek redress and a seat at the looting trough through the barrel of the gun.”


Global trade experts gather in Riyadh as virus crisis heats up

Updated 24 February 2020

Global trade experts gather in Riyadh as virus crisis heats up

  • More than 1,000 international companies set up operations in Saudi Arabia last year

RIYADH: World trade experts are gathering in Riyadh for a major conference as the coronavirus crisis casts a shadow over global commerce.

The Asia House Trade Dialogue takes place on Tuesday in the Saudi Arabian capital, with thought leaders and policymakers taking part in the first such event to be staged in the Kingdom. Around 200 delegates are expected to attend the one-day forum.

Leading thinkers will share their insights on global trade, women’s growing role in business, and the energy industry moving toward renewable technologies. There will also be a live link with a Beijing-based expert on Chinese business to discuss the economic effects of the virus.

Asia House is a London-based consultancy which is headed by the former British trade minister and chairman of the HSBC banking group, Lord Green of Hurstpierpoint. He said: “With Saudi Arabia hosting the G20 this year, we believe it is an important time to bring our trade dialogue to Riyadh to explore the economic shifts taking place in the region and beyond.”

The event is sponsored by the Saudi British Bank, whose chair Lubna Olayan will deliver the keynote speech.

She said: “Trade has historically always been important to the development of the Kingdom, and that is equally true today as the Far East and the Middle East are once again becoming increasingly connected, and we begin a year in which Saudi Arabia leads the G20, with deliberations around trade and investment being a major focus of the B20 (the business arm of G20 summit of world leaders). It is truly an exciting time, so we are pleased to be jointly hosting this important event to explore opportunities for enhancing and facilitating growing trade links between the Far East and the Middle East.”

The conference will be opened by Ibrahim Al-Omar, the governor of the Saudi Arabian General Investment Authority, the body which promotes foreign investment in the Kingdom. Arab News is the strategic media partner for the event.

Lord Green said: “The Middle East remains an extremely important region for global trade, especially as the Gulf broadens its relationships with Asian markets. Just last year, more than 1,000 international companies set up new operations in Saudi Arabia, highlighting business interest in the Kingdom.”

Victor Gao, who is vice president of the Beijing-based Center for China and Globalization, will answer questions via web link about the impact of coronavirus on the Chinese economy.

Saudi Arabia launched its G20 presidency last December with a declaration of its program, which seeks to support innovation, achieve prosperity, empower people and preserve the planet, in line with the Kingdom’s Vision 2030 reform plan.

King Salman hailed the G20 presidency as proof of the country’s key role in the global economy.