South Africa to invest $1 billion in South Sudan's oil sector

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JUBA (Reuters) - South Africa will invest $1 billion in South Sudan’s oil
sector, including in the construction of a refinery, the South African
minister for energy and his South Sudanese counterpart for petroleum
said on Friday.

South Sudan’s oil industry is dominated by Asian firms including China

National Petroleum Corporation (CNPC), Malaysia’s Petronas and
India’s Oil and Natural Gas Corporation (ONGC Videsh).

The two ministers signed a memorandum of understanding (MoU) which

will also involve South Africa taking part in the exploration of several oil
blocks, they said.

“When this refinery is complete, it will have the capacity of producing

60,000 barrels of oil per day,” Jeff Radebe, the South African minister
said without giving further details.

A source close to the South Sudanese government however told

Reuters that “there is no commitment to build a refinery” beyond the
MoU calling for collaboration between the two countries to study the
possibility of building it.

“What we have signed this morning is the cooperation between our two
national oil companies, Nilepet and South Africa Energy Fund then from
there the funding will come from Central Energy Fund (CEF) of South
Africa,” Ezekiel Lol Gatkuoth, the South Sudanese minister said.

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South Sudan’s Trinity Energy to Commence Refinery Construction in Q1 2019

OILNEWS NOVEMBER 25, 2018 LEAVE A COMMENT
Trinity Energy Ltd, a South Sudan homegrown Oil Marketing Company will in the first
quarter of 2019 shall start construction works of South Sudan’s first oil refinery targeting
to supply the East Africa countries with the region sourcing Petroleum products
amounting to 15 million tons mostly from Asian Refineries.
This follows the award of a license to build a 50,000 Barrels Per Day (BPD) Petroleum
Refinery in South Sudan to Trinity’s Group Company A&A Oil and Gas Ltd with the
green field Refinery planned to be set up near the Oil fields in Palouch., about 350
Kilometers from Ethiopia (one of the largest energy markets in Africa that is growing at a
CAGR of 15%).

Preliminary Feasibility Studies have been done by M/s Foster Wheeler of France &
Engineers India Ltd (EIL) for the proposed Refinery.
According to Trinity the Refinery shall produce approximately 2.5 Million tons of
Petroleum products, initially but shall scale up to 10 Million tons in the next 5 years
period, especially to cater to high growth markets like Ethiopia, Kenya, Sudan Uganda
and Tanzania.
“This will be a modular Refinery with capacity of 25,000 Barrels Per day and being a
modular Refinery, we are in a position to scale up the capacity in multiples of 25000
BPD within the shortest period of time.”
This is timely as South Sudan’s crude oil production shall hit 300,000 BPD by the 3rd
Quarter of 2019 and with such production, the country is in a position to cater to the
demands of the entire region with sufficient capacities in refining the locally produced
crude oil.
Financing of the project according to Trinity shall be by way of its own balance sheet
and PE partners.
M/s Peiyang Chemical Engineering Company (PCC) from Tianjin, China shall be the
EPC contractor for the Refinery project and they will set up a workshop to fabricate
major components for the Refinery.
Trinity adds that it is in negotiations with technology companies to build a product
pipeline to Ethiopia.
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South Sudan nears fuel independence with launch of two oil refineries

South Sudan is set to become almost self-sufficient in oil products within a year as two
refineries enter production, saving Africa’s newest nation foreign exchange it now uses
to buy diesel from neighbors.
“By 2014, we would be 80% independent in terms of requiring energy products from any
other country,” Paul Adong Deng, managing director of state-owned Nile Petroleum
Corp., said in an interview from the capital, Juba. “I think by 2016-17, we will be entirely
independent.”
South Sudan’s first refinery, which will process 5,000 bpd, will begin operating by Dec.
31 and a second one will start by the end of 2014, bringing total processing capacity to
17,000 bpd of crude oil, he said.
The facilities are being built in the oil-producing states of Unity and Upper Nile. The first,
in Bentiu, is a joint venture between Nile Petroleum and Russia’s Safinat, with a 30%-
70% equity split respectively. It cost “under $100 million,” Deng said.
“We envisage that before year-end, the construction would have been completed and
the commissioning would have taken place” after a six-month delay caused by the rainy
season and poor road conditions from Kenya’s port of Mombasa, through which the
equipment was shipped from Russia, he said. Construction is yet to start on the larger
one in Thiangrial.
South Sudan imports as much as 40 million liters (10.6 million gallons) of fuel a month
from neighboring Kenya, Deng said. About 80% of imports are diesel and 20% gasoline.

Sudan reliance

While South Sudan may review a decision to stop an arrangement under which it was
using the refinery near Sudan’s capital, Khartoum, to process crude that was then
trucked back to the south, Deng ruled out relying on Sudan for its energy needs for the
“foreseeable future,” as a border conflict keeps bilateral relations tense.
South Sudan seceded from neighboring Sudan in July 2011 and took three-quarters of
the formerly united country’s oil output. The landlocked country currently exports all its
crude, about 220,000 bpd, through pipelines across Sudan. A dispute between the two
neighbors over export revenue halted South Sudanese production last year, cutting the
country’s economy by half to $9.34 billion, according to World Bank data.
“With the refinery operational, ultimately we will no longer continue under the threat of
shutdown,” Information Minister Mikael Makuei Lueth said in an interview. “Even if they
shut down we will continue to refine our oil production.”

Fuel smuggling

Oil product smuggling across the northern border will probably to drop after Sudan’s
government removed subsidies on fuel, Deng said. The removal of fuel subsidies
triggered protests in Sudan as the cost of energy and transport rose.
Henry Dillah Odwar, who heads the parliamentary committee on energy, said South
Sudan still needs to build roads from the refineries to Juba so it can bring fuel to the
capital in the rainy season. Nile Petroleum is studying the viability of transporting the
products by “special barges” as they work on constructing all-weather roads, Deng said.
South Sudan has sub-Saharan Africa’s biggest oil reserves after Nigeria and Angola,
according to BP data. Its low-sulfur crude, prized by Japanese buyers as a cleaner-
burning fuel for power generation, is pumped mainly by China National Petroleum
Corp., Malaysia’s Petroliam Nasional Bhd. and India’s Oil & Natural Gas Corp.

By Julius Barigaba
A year after the US removed a decade-long economic sanctions on Sudan, the country
is in talks with American and Russian firms to build a bigger oil refinery at its main port
on the Red Sea.
Sudan government officials Tuesday revealed that TK Ural Trade of Russia had
proposed to build a refinery with the capacity to process 200,000 barrels per day, while
Energy Link International from the US offered to build one with 100,000 barrels per day
capacity.
Sudan's Petroleum and Minerals minister Azhari A. Abdalla had initially told journalists
on the sidelines of the second South Sudan Oil and Power Conference in Juba last
month that Khartoum was in talks with an American company.
But on Tuesday, his assistant Mr Nader Mohamed A. Khalifa, clarified that Khartoum
"received expression of interest letters from the two firms in October 2018".
He added that Sudan was yet to decide on which company to pick to build the Port
Sudan refinery, but it would appear that Khartoum was keen on a much bigger facility,
to serve both the local and the regional markets.
"We are looking at 200,000 barrels because anything below these days is not feasible,"
Mr Abdalla said.
A safety valve
"What we are interested in is having a refinery at the port, serving the region. But also, it
will be like a safety valve for us because we are also importing oil."
Asked if Sudan had enough reserves to feed the planned facility, Mr Abdalla conceded
that the country produces much smaller volumes, after the majority of the oilfields fell
into South Sudan territory when it became independent in 2011, with Khartoum
retaining only 30 per cent share.
"We are not going to use our own field stock. We are leaving it to the investor [to source
field stock]," said Mr Abdalla.
These moves are seen as the two Sudans jostling for the Ethiopian market, which
consumes $4.5 billion worth of refined fuel per year.
For instance, South Sudan's petroleum masterplan is to build four refineries at Paloch,
Pagak, Akon and Thiangrial, some of these facilities targeting Ethiopia, says Dr Abel
Chol Deng, the Managing Director of country's national oil and gas company, the Nile
Petroleum Corporation.
Restore relations
When complete, the refineries will add to the one at Bentiu to process a combined
127,000 barrels per day.
Sudan mainly provides transport for crude pumped from the south, on ward to Port
Sudan for export, at the tariff of $9.10 per barrel.
Khartoum - long accused of stoking terrorism in the region - wants to drop this label and
restore relations with its neighbours to attract investors, to rebuild its economy that took
a hit when oil production was shut down after South Sudan erupted into war in 2013.
For instance, Mr Abdalla explained that Khartoum was keen to broker the peace deal
between the South Sudan warring factions for it to be taken off the list of countries that
sponsor terrorism.
"Some companies would like to wait until the name of Sudan is totally lifted from the list
of countries that harbour terrorists... Our intention [to broker the peace deal] was that
Sudan can be removed from that list," Mr Abdalla told journalists in Juba, last month.