SA’s state-owned Strategic Fuel Fund (SFF) has begun exploration efforts in South Sudan in search of oil and gas, which the entity hopes will ensure the country’s energy security for years to come.
The SFF and South Sudan’s national oil and gas company, Nile Petroleum Corporation Limited (Nilepet), signed an agreement last week allowing the former to use the latter’s geophysical planes, in a move that kicked off exploration activities in the “highly-prospective B2 Block”.
The agreement is a fulfilment of a exploration pact signed between the two counties in 2019. The B2 Block is believed to be South Sudan’s most promising oil block.
SFF currently holds 90% equity in Block B2 and NilePet owns 10%.
SFF’s acting corporate affairs manager, Natalie Taft, said the agreement enhanced the objectives of the Africa Continental Free Trade Area, which envisions trade between African Countries.
“It is common practice for countries with little or no oil reserves to acquire equity in the oil reserves of oil rich countries. SA therefore benefits from owning equity in barrels of oil situated in South Sudan, which can be utilised as feedstock for its domestic refineries or traded in the open market for profit or exchanged for refined product. South Sudan benefits from the investment in the exploration of crude oil in their country,” Taft said.
“South Sudan energy opportunities has the potential to introduce new supplies to enable energy security in SA. South Sudan has the third-largest oil reserves base in Africa [and] it provides opportunity for SA to have access to sizeable oil reserves. Oil reserves in South Sudan will act as a natural hedge to oil price volatility.”
The SFF is responsible for acquiring and building key energy storage infrastructure as well as maintaining the country’s strategic fuel stocks, to ensure SA’s security of energy supply.
It operates from Saldanha Bay and Milnerton (Western Cape), and eMalahleni (Mpumalanga). Its core assets include steel storage facilities; 39 steel tanks, each with 200,000 barrels of storage capacity; and six in-ground tanks, each with 7.5-million barrels storage capacity.
Under the 2019 pact, to finance the exploration phase of this project, capital commitments will be funded from internal cash resources with total exposure for the six-year exploration phase being $48m, with an estimated year-on-year commitment of $8m per annum.
“Currently, SFF is conducting exploration activities for oil and gas. To mitigate risk and find the sweet spots, SFF is conducting geotechnical activities to map subsurface and confirm the presence of an active petroleum system.
"In addition, SFF as a responsible operator is carrying out environmental and social impact assessment studies before making any footprint on the ground," Taft said.
Should the exploration activities be successful, SFF is expected build a 60,000 barrel per day oil refinery and pipeline in the Central African country.
In 2023, South Sudan put up 14 oil blocks for sale in a bid to increase production to pre-war levels of 350,000 barrels a day.
The country has third-largest oil reserves in Sub-Saharan Africa, estimated at 3.5-billion barrels, with only about 30% of the country explored.
According to the SFF’s 2022 annual report, training has been provided to engineers in South Sudan’s Nilepet and ministry of petroleum in compliance with the Exploration and Production Sharing Agreement.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.