May 6, 2019 / 6:52 AM / 17 days ago

South Sudan agrees oil exploration deal with South Africa

JUBA (Reuters) - South Sudan and South Africa on Monday signed a six-year production-sharing agreement for an untapped exploration block in the East African country, where production has been hit by civil war.

FILE PHOTO: South Sudan's Minister of Petroleum, Ezekiel Lol Gatkuoth listens to a speech during Petrotech conference in Greater Noida, India, February 10, 2019. REUTERS/Anushree Fadnavis/File Photo

The Exploration Production Sharing Agreement for Block B2 was signed by Ezekiel Lol Gatkuoth, South Sudan’s Minister of Petroleum and Jeff Radebe, South Africa’s Minister of Energy, a Reuters reporter at the ceremony said.

Radebe said the South Africans had committed $50 million for exploration. South Africa was also interested in building a pipeline and refinery, he said, bringing their total projected investment to $1 billion, according to memorandum of understanding signed in November.

Block B2 was once part of a 120,000 square kilometer area known as Block B, which was divided into three licenses in 2012 and is thought to be rich in hydrocarbons although very little drilling has been done there.

The block lies in greater Jonglei State.

South Sudan became the world’s youngest country after it split from Sudan in 2011. It has one of the largest reserves of crude in sub-Saharan Africa, only a third of which have been explored.

But production plummeted when civil war broke out two years after independence. A September peace deal is largely holding but a plan to form a unity government by May 12 has been delayed.

In April, Awow Daniel Chuang, director general for petroleum at the ministry of petroleum, said production was expected to reach around 195,000 barrels per day by the end of the year, from 175,000 at present, and rise to 220,000 bpd by early 2020.

The government has said production would reach pre-war levels of 350,000 to 400,000 bpd by mid-2020.

More than 400,000 people died in South Sudan’s civil war, which displaced around a third of the country’s 12 million population and led to famine in parts of the country.

Reporting by Denis Dumo; writing by George Obulutsa; Editing by Katharine Houreld/Louise Heavens/Jane Merriman

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