With its independence, the newly-formed Republic of South Sudan (South Sudan) became Africa’s sixth largest oil producer and Sub-Saharan Africa’s Second. They received 75 percent of the former state of Sudan’s oil production as their territory holds the majority of producing blocks and the lion’s share of the proved reserves.
CNPC, Petronas and ONGC are the dominant foreign investors in the Sudan and South Sudan oil industry. The minimum stake that the companies hold in any one E&P asset is 40 percent, 30 percent and 24 percent respectively. During their time in Sudan they have formed a strong relationship with the Khartoum government and its state oil company Sudapet. The challenge these companies will now face is forming a good working relationship with the new government without alienating Khartoum. Sinopec is another important player in the new state, but as 6 of its 7 Sudanese assets are in South Sudan, it will not have as many diplomatic issues as its counterparts. The chart below shows the key players in Sudan and South Sudan.
Sudapet has a working relationship with their South Sudan counterpart Nile Petroleum Corp (Nilepet). Sudapet has been helping Nilepet train its staff since April 2010. They have stated that they intend to work together on assets in each other’s countries, and as can be seen in the chart above, Sudapet already owns a large number of interests in South Sudanese assets. At present, Nilepet does not have an agreed percentage ownership in any E&P assets in either country. It will receive stakes, but details on this are unlikely to materialise before a new oil revenue sharing agreement between the two countries is finalized.
South Sudan faces many issues as a new state; it is one of the most undeveloped nations in the world. A key issue that affects the future stability of this new nation is the urgent need to negotiate a new oil revenue sharing deal with their northern neighbour the Republic of Sudan (Sudan). The previous deal with the north to share revenues 50:50, which had been in place since the end of civil war in 2005, ended when South Sudan became independent. Sudan is unwilling to let the South become the sole beneficiary of what was a joint resource. This is not unexpected, considering that oil formed 65%…
