South Sudan seeks CNPC aid to boost oil production

South Sudan has requested that China National Petroleum Corp. (CNPC) increase crude oil production from two of its largest fields, with the assurance that CNPC can renew a production agreement that is set to expire in four years.

This marks a change in strategy from South Sudan’s earlier plan, to have the state-owned Nile Petroleum Corp. (Nilepet) take over some of the nation’s most productive oil blocks when the contracts of their current operators expired. The primary focus has now shifted to reversing the decline in oil production.

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Production challenge

Nilepet’s managing director, Bernard Amour Makeny, met with CNPC in China to emphasize the urgency of increasing oil production. He expressed South Sudan’s commitment to ensuring the safety of CNPC’s staff and protecting their investment in the country.

Oil production is of paramount importance to South Sudan as it seeks to recover from years of civil war that have severely impacted its economy. The country has been facing technical and operational challenges that have led to a decline in oil production from the Paloch oil fields. The fields are currently producing significantly less than their peak production capacity, which was 260,000 barrels per day (bpd). These challenges have made the partners hesitant to invest further in the absence of certainty regarding contract renewals

CNPC holds the largest share in the Dar Petroleum Oil Operating Co. consortium, which operates in blocks 3 and 7 in the Paloch oil fields in the Upper Nile region. Other partners in the consortium include Petronas and Sinopec Corp. South Sudan is assuring them that these contracts can be renewed, providing CNPC with the confidence to commit to production through 2027.