AOP talked to Prince Engr Arthur Eze, Chairman of Oranto Petroleum, about key market trends in South Sudan, including new actors in the market, the country’s exploration potential and the need for infrastructure to be developed.
Atlas Petroleum International and Oranto Petroleum represent Nigeria’s largest privately-held, Africa-focused exploration and production group. Its extensive footprint across the African continent includes 19 oil and gas licenses in 10 countries, including producing assets in Nigeria and Equatorial Guinea and numerous Atlas/Oranto-operated blocks. Oranto Petroleum entered South Sudan this year in an Exploration Production Sharing Agreement.
South Sudan has seen few new entrants to the market in recent years, but that is starting to change. What is attractive to Oranto about South Sudan and how do you see new entrants changing the market?
South Sudan has great appeal as one of the last true exploration frontiers in the world for oil and gas. Already, with a bare minimum of exploration work completed, the country has 3.5 billion barrels of oil and 3 trillion cubic feet of gas in proven reserves. Block B3, our exploration block in the country, has estimated reserves of more than 3 billion barrels of oil. Clearly, the country offers great exploration opportunities for the companies that are experienced in frontier markets and operating in underdeveloped regions.
While we are the only new company to sign a contract in recent years, several companies have expressed interested in participating in direct negotiations for oil and gas acreage in the country. The Ministry of Petroleum is also in negotiations with super major Total and independent Tullow Oil. This spark of interest is very promising for the country, as development of the country’s oil and gas sector will be key to the successful development and diversification of the overall economy, especially the power generation sector. As more and more companies enter the market, and as more job opportunities and economic opportunities are created, I think we can see an increase in stability.
A lack of oil and gas infrastructure is considered to be a major obstacle to operating in South Sudan. What infrastructure projects, in your opinion, should be prioritized?
For oil and gas explorers and operators, a vital issue will be movement of people, supplies and, eventually, product. To this end, development of roads, a transportation network using the river and pipelines are very important to the continued development of the sector.
Often, oil and gas companies become a partner with the government in the development of the necessary oil and gas infrastructure to properly develop resources.
South Sudan is actively developing its own refining capacity, with companies like Trinity Energy moving forward with refinery projects. How do you see this impacting the sector?
Having domestic refining capacity can only improve the oil and gas sector, from the upstream operations to the downstream diversification. Having refineries within the country creates a domestic market for the sale of oil and gas products, and expands the country’s downstream capacity. This is excellent news for oil and gas operators who are currently looking for a market for petroleum products, but lack the pipeline capacity to export product, and for potential producers.
How does South Sudan’s internal conflict impact exploration?
Naturally, internal conflict is not an ideal situation, but the oil and gas industry is no stranger to operating in difficult environments. Nigeria, the top oil and gas producer on the continent, is a prime example — despite militancy from Boko Haram and in the Niger Delta region, the country remains a top spot for oil and gas investors because of the wealth of opportunities.
And in South Sudan, the government has invested heavily in security and is working to keep the country safe and attractive for international investors. In a frontier market like South Sudan, the environment is often a ‘high-risk, high-reward scenario’ and certain investors will remain interested.