South Sudan asks CNPC to boost oil production, recommits to partnership

(Bloomberg) – South Sudan has asked China National Petroleum Corp. to boost crude oil production from two of its biggest fields with the assurance that the company can renew a production agreement expiring in four years.

The request is a U-turn from a plan announced by the East African nation in 2020 to have state-owned Nile Petroleum Corp. take over some of the nation’s most prolific oil blocks when their operators’ contracts expire. South Sudan’s priorities have since refocused on reversing a decline in production.

Nilepet met with CNPC in China to emphasize the need to increase oil production, Bernard Amour Makeny, its managing director, said in an interview in Juba on Sunday after returning from the trip. “I had to give them the confirmation and re-commitment of South Sudan in terms of safety of their staff, in terms of safety of their investment.”

Oil production is crucial for South Sudan to rebound from years of civil war that devastated the economy. CNPC has the biggest share in the Dar Petroleum Oil Operating Co. consortium that operates in blocks 3 and 7 in the Paloch oil fields in Upper Nile. Other partners in the consortium include Petronas and Sinopec Corp.

The two blocks collectively produce 104,000 bpd from a peak of 260,000 bpd due to technical and operational challenges and the partners are hesitant to invest because they’re not sure if the contracts that expire in four years will be renewed, according to Makeny. “What we are trying to tell them is, you have to be sure of 2027 because nobody is going to kick you out.”

South Sudan has also held talks with Kenya and Ethiopia to truck oil to the coast for export, which would mitigate its dependence on pipelines that run through war-plagued Sudan. Makeny said the crisis in the north hasn’t yet affected production.