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Petronas hints on quitting South Sudan oil market

Juba, South Sudan,

June 03, 2021 – Accused of environmental negligence, Malaysian oil company Petronas has hinted at the possibility of quitting the South Sudan petroleum market after the government announced that all operating companies must comply with national laws.

Petronas hints on quitting South Sudan oil market
Petronas Operating Company Facility (photo credit: GariGold)

This comes after the Ministry of Petroleum announced that it was rolling out another round of licensing to attract investors seeking to explore business opportunities in the oil sector.

However, a day after the South Sudan Oil and Power Conference held at Crown Hotel in the capital Juba from 29th to 30th June, Petronas revealed that it may not take part in the upcoming licensing round citing challenging market conditions.

“Due to challenging market conditions, Petronas is undertaking a strategic review of its assets to ensure that its portfolio remains resilient and commercially viable. Therefore, Petronas may not be participating in South Sudan’s first licensing round this year,” the company said on Thursday.

The reason that prompted the decision to withdraw from the licensing round is underwhelming given that Petronas took part in the country’s annual petroleum event.

In May, the Ministry of Petroleum announced it would soon launch the first oil licensing round adding that it had identified new exploration blocks with potential hydrocarbons and that it had compiled sufficient data to provide to interested investors.

But Mr. Puot Kang Chol, Minster of Petroleum told foreign oil investors to adhere to the 2018 National Content Policy should they want to continue operating in the country.

The policy provides for the procurement of goods and services produced in South Sudan, employment and training of South Sudanese, and transfer of skills, knowledge, competence, and technical know-how.

“Compliance to the local content policy will be measured and monitored with the submission of the annual report by oil companies operating in South Sudan to the relevant department in the ministry of petroleum,” said Mr. Pout during the opening session of the conference on Tuesday.

The local content policy aims to mitigate employment and wages disparity between South Sudanese nationals and foreign nationals, mainly from China and Malaysia which have resulted in series of complaints over the past years.

The warning came after the Ministry of Environment threatened to revoke the operating licenses of oil-defiant oil companies that would not abide by environmental laws.

Also in May, the Auditor General said that oil companies operating in the country were not audited since the country attained independence in July 2011.

The chamber said they have not been provided by the data and information regarding the operation and revenue of the companies, including state-owned Nile Petroleum Ltd, Greater Pioneer Operating Company – a consortium of three operating companies.

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