South Africa and Sudan signed Exploration and Production Sharing Agreement (EPSA) yesterday granting permission to South Africa’s state-owned Strategic Fuel Fund (SFF) to explore oil in Block B2, in Muglad basin that spreads both into Sudan and South Sudan. The B2 area includes productive parts of the Muglad Basin and is part of the 120,000-kilometer square Block B which was split into three in 2012. Nigeria’s largest privately-held, Africa-focused exploration and production group.
The agreement is a testimony to South Africa’s willingness to invest in the conflict prone South Sudan since its independence in July 2011.. It should be noted that the deal comes at a time South Sudan is facing uncertainty over the transitional government of national unity. The joint venture between SFF and South Sudan’s Nilepet proposes to spread over a period of six years collaborating in areas like aerial exploration, seismic tests and drilling wells upon discovery of oil. In 2018, South Africa’s Department of Energy committed an investment of $1 billion into South Sudan’s petroleum industry, for securing energy supplies for South Africa. Both the countries are also exploring the possibility of setting up a 60,000 barrel per day refinery to supply oil products to the domestic market in South Sudan, as well as to export to neighboring countries. The agreement also provides for training of local people for oil production and management by the South African partner. The agreement has raised hopes of a revival of production levels. South Sudan boasts of the third-largest oil reserves in sub-Saharan Africa, estimated at 3.5 billion barrels. But just 30 percent of the reserves are explored.
