South Sudan to take over oil operations in nationalization drive

(Bloomberg) — South Sudan is taking steps to take over the operations of international oil companies in the country to increase its share of revenue, even as production declines, according to a government official.

The plan, to be implemented over five years, reflects moves by other African nations to play a more active role in their own oil and gas fields. South Sudan has been boosting the role of state-owned Nile Petroleum Corp., taking over assets as contracts expire.    

“Nationalization will be done through training where we are able,” Awow Daniel Chuang, South Sudan’s undersecretary in the Ministry of Petroleum, told reporters on Friday in Juba, the capital. “In areas where we don’t have expertise, we will have to use foreigners for a very short period of time” until those skills are acquired, he said.

Operators in the East African nation include China National Petroleum Corp, India’s OGNC and Malaysia’s Petroliam Nasional Bhd.

South Sudan has struggled to rebuild its economy after a devastating civil war and a fragile peace agreement, signed two years ago, and communal violence have hampered efforts to boost activity. Recent flooding added to constraints, limiting output from the oil fields to 130,000 barrels a day. That’s down from about 350,000 barrels before the war. 

The danger from floods will remain unless precautionary measures are taken, according to Chuang. A data center has been opened and training centers will be built, but a foreign contingent will remain, he said. 

“Oil production is an international business destination that requires technology, that requires knowledge, and everywhere, even America, does not have 100% local content,” Chuang said.