South Sudan to break up huge oil block
South Sudan will split a massive oil block largely held by Total into three parts, giving one to the French company and the others to two firms, officials said, in the biggest shake-up of the nation’s concessions since it seceded from Sudan.
One oil industry source identified the other two operators as US major ExxonMobil and Kuwait’s Kufpec, but the government did not confirm the names. Total, ExxonMobil and Kuwait Petroleum Corp, the state-owned parent firm of Kufpec, all declined to comment on the division of the mostly unexplored block, known as Block B.
Total had already challenged the decision to split the concession, granted before South Sudan declared independence from Sudan last year, Deputy Minister for Petroleum and Mining Elizabeth James Bol told Reuters. But other government officials said South Sudan had the right to renegotiate deals agreed in the old, united Sudan and would go ahead and divide the concession, which comprises much of South Sudan’s eastern Jonglei state - a remote region struggling with an insurgency and violent tribal clashes.
South Sudan, which depends heavily on oil but whose reserves are expected to decline sharply in coming years, had been pressing Total to start exploring Block B, which at about 120,000 sq km was roughly the size of nearby Eritrea. Total stopped operations in the block in 1985 after the resumption of Sudan’s decades-long civil war, which ended with a 2005 peace deal that paved the way for South Sudan’s secession last year.
Despite holding on to its claim to a leading stake in Block B, Total has not yet resumed exploration – a source of friction with some South Sudanese officials. In February Total said it would resume exploration soon. It was unclear whether Total would have any legal grounds to challenge the decision.
A petroleum bill passed after South Sudan seceded said its new government was not bound by past agreements and had the right to review and split blocks.
In January, South Sudan said it had signed new agreements with the Chinese, Malaysian and Indian companies that dominate the country’s oil sector to replace the existing deals with the united Sudan. South Sudan’s Information Minister Barnaba Marial Benjamin told Reuters one of the three blocks would go to Total.
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