Republic of South Sudan has Petroleum Legislation and Regulations which include Petroleum Act, Petroleum Revenue Management Act and Petroleum Regulations.
2012 Petroleum Act Overview
The act has 21 chapters and 100 sections covering upstream-ownership of petroleum is vested in the people and managed by the Republic of South Sudan for their benefits. The ministry of Petroleum is responsible for the management of the petroleum and gas sector.
Emphasis is on maximum recovery within a framework such providing for “prudent operations”, using the best international practices, ensuring safety, security and protection of environment, and requiring transparency, accountability and ethical behavior on the part of licensees/contractors and the government.
The Exploration and Production Sharing Agreement (TA) Transitional Agreement Contractual regime continues with certain key provisions of these agreements made part of the legislation.
A licensing regime for reconnaissance activities, installers and operators of transportation systems (including pipelines) is provided for based on an open transparent bidding process.
Highlights & Current Status
- Safety and environment put primary responsibility on the contractor.
- The Act endorses the concept of “local content”, using South Sudanese if they are competent and available to fill skilled and unskilled positions.
- The Act affirms Ministry of Petroleum responsibility for administration, implementation and enforcement.
- The Act provides for broad regulatory powers to legislative regime.
- The Act has been enacted and has been in force since July 2012.
Petroleum Revenue Management Act
The Petroleum Revenue Management Act (PRMA) establishes a formalized structure for the distribution of petroleum revenues to immediate budgetary needs, savings including revenue stabilization and future generations as well as direct transfers to petroleum producing states and affected communities.
It establishes a high standard for reporting requirements for both the government and oil companies, with overarching principle of transparent and accountability management.
The Act was approved by South Sudan’s two houses of Parliament and was signed into law by the President of the Republic of South Sudan on November 10, 2013.
Petroleum Regulations
The Health, Safety and Environment Systems regulation was signed into law by the Minister of Petroleum on March, 31 2015.
The regulations provide for:
- Contractors to develop, implement, maintain, comply and ensure compliance with an adequate and effective management systems.
- Must follow a “ Plan-Do-Check-Act” framework.
- Must fit into the over-all management system framework.
- Must follow the Environmental and Social Impact assessment (ESIA) for the area involved.
- Must be site specific for important stages in the life-cycle of petroleum activities.
The regulation will better enable and support the Ministry’s HSE group to monitor and assess the contractors HSE performance against a defined management system and when combined with the administrative penalties program that is currently being developed, gives the government extremely effective tools for compliance and enforcement.
Amendments to Petroleum Act 2012 have been drafted to enable a regulatory regime for charging and collecting administrative mentalities and are under review by stakeholders. The draft regulation putting the regime into effect is also being prepared simultaneously with the draft statutory provisions. Four Petroleum Regulations are also in various stages of development. These four Petroleum Regulations include Occupational Health and Safety, Records and Reporting, Drilling and Production, Graticulation and Licensing.
Exploration and Production Sharing Agreement (EPSA) Overview
The current producing petroleum blocks in South Sudan include Blocks (1, 2 & 4), Blocks (3 & 7) and Block 5A. The Republic of South Sudan has entered into or is negotiating six agreements with foreign investors for the exploration of the country’s petroleum reserves. Crude oil production is being realized under three agreements and the remaining three are still in various stages of the complex negotiation phase. These production and potential exploration areas include Blocks (1a & 1b)-Greater Pioneer Operating Company (GPOC), Unity state, Blocks 5A- SUDD Petroleum Operating Company (SPOC), Unity state, Blocks (3D, 3E & 7E)-Dar Petroleum Operating Company (DPOC), Upper Nile state, Block B2- Nile-Orange(SFF & NILEPET) and BLOCK B3 (contracted to Oranto Petroleum). In addition to this, there is no production from Blocks (A, B1, C1, C2, D1, D2, E1 & E2)- Open. All the open Blocks are being prepared for Licensing Rounds.
Blocks (1a & 1b)-Greater Pioneer Operating Company (GPOC), Unity state
Blocks (1a & 1b) are located in Unity state where Nile Blend crude oil is produced from some 283 wells. The final oil processing is done at Heglig facilities in Sudan prior to flowing into the larger Nile Blend export stream via the GNPOC pipeline to the marine terminal in Port Sudan and onwards to international markets. The producing wells are located in several different oilfields with varying qualities which are blended to average 34 API, 0.06% Sulfur.
Blocks 5A- SUDD Petroleum Operating Company (SPOC), Unity state
Blocks 5A is located in Unity state and has some 55 producing oil wells. Crude oil designated as Nile Blend flows to the Heglig facilities in Sudan for final processing prior to export through the GNPOC pipeline. Due to the heavier crude oil characteristics, Block 5A production is typically restricted to about 10% of the total GNPOC throughout in order to not significantly degrade the total oil volumes.
Blocks (3D, 3E & 7E)-Dar Petroleum Operating Company (DPOC), Upper Nile state
Blocks (3 & 7) are located in Upper Nile State and have some 640 oil wells producing the heavier and acidic Dar Blend crude. The crude oil is initially processed at the DPOC field processing facilities in Palouge prior to passing to the Al Jabalain Central Processing Facilities across the border in Sudan for final processing and water removal. The oil then enters the Petrodar pipeline for transport to the Port Sudan marine terminal and onward to the international markets. The producing wells are located in several different oilfields with varying qualities which are blended to average 26 API, 0.1% Sulfur.
Crude Oil Reserves and Analysis
A recent comprehensive reserves assessment has not yet been independently completed by the government. The Ministry of Petroleum (MoP) Upstream department has been working hard in consultation with the Joint Operating Companies (JOCs) to improve the accuracy of the reserve estimate. The data available from JOCs show total reserves of 1.1 billion Standard Tank Barrels (MMSTB). Moreover, historical production data and production forecast indicates the average actual daily production to date and the projected decline rates for all three producing petroleum blocks through to 2035 without further re-investment or new investments to replace reserves.
September 2012 Cooperation Agreements-South Sudan and Sudan
On September 27, 2012 the Government of South Sudan and the Government of Sudan entered into a number of agreements to cooperate across a range of areas of common interest and committed themselves to implement these agreements including “The Agreement on Oil and Related Economic Matters”. Collectively these agreements are known as the 2012 Cooperation Agreements.
Oil Agreement Highlights
The principle highlights of the Agreement Concerning Oil and Related Economic Matters are as follow: First, South Sudan would have access rights to the GNPOC (Nile Blend) and Petrodar (Dar Blend) processing and transportation facilities located on the territory of Sudan. South Sudan would provide their proportionate share of pipeline fill which would be re-delivered to South Sudan at the expiry of the agreement. All payments will be lifted on the net barrels lifted at the Port Sudan marine terminal and any inland lifting. The maximum cumulative amount of Transitional Financial Arrangement is USD 3.028 billion. The initial period of the agreement was for a period of three years and six months as of the date of the first oil lifting at the marine terminal and a bill of lading issued (start June, 2013; expired December, 2016). The Agreement was further extended to December 31st, 2019.
Source: Ministry of Petroleum (MoP) Petroleum Report (June 2019 – May 2020)