Petronas hits exit as government tightens petroleum laws

Following the recently concluded petroleum annual conference, Petronas, a Malaysian oil company has said it may not take part in South Sudan’s oil licensing due to challenging market conditions.

Last week, South Sudan held the oil annual conference, drawing participants from national, regional and international businesses to discuss ways to unlock investment opportunities in the country.

The two-day conference concluded with the government of South Sudan opening up doors to investors into the country to take up investment in oil and other minerals.

“The blocks are out there-you are welcome –these blocks are for the investors to apply for,” said Dr. Barnaba Marial Benjemin, Minister of Presidential Affairs on Tuesday during the conference.

But a day after the conference, Petronas told edgemarket.com it may not take part in the next licensing round as seeks to gather its assets.  

“Due to challenging market conditions, Petronas is undertaking a strategic review of its assets to ensure that its portfolio remains resilient and commercially viable. Therefore, Petronas may not be participating in South Sudan’s first licensing round this year,” the company said on Thursday.

It was unclear what the Malaysian company meant by the challenging market condition just after taking part in the round of South Sudan’s annual petroleum on June 30.

Early last month, the Ministry of Petroleum announced it would soon launch the first oil licensing round adding it had identified new exploration blocks with potential hydrocarbons and that it had compiled sufficient data to provide to interested investors.

‘Must adhere’

However, Mr. Puot Kang Chol, Minster of Petroleum told foreign oil investors to adhere to the 2018 National Content Policy should they want to continue operating in the country.

The policy provides for the procurement of goods and services produced in South Sudan, employment and training of South Sudanese, and transfer of skills, knowledge, competence, and technical know-how.

“Compliance to the local content policy will be measured and monitored with the submission of the annual report by oil companies operating in South Sudan to the relevant department in the ministry of petroleum,” said Mr. Pout during the opening session of the conference on Tuesday.

The local content policy aims to mitigate employment and wages disparity between South Sudanese nationals and foreign nationals, mainly from China and Malaysia which have resulted in series of complaints over the past years.

In April, the Auditor General revealed that oil companies operating from the country had not been audited since South Sudan got independence in July 2011.

The chamber said they have not been provided by the data and information regarding the operation and revenue of the companies, including state-owned Nile Petroleum Ltd, Greater Pioneer Operating Company – a consortium of three operating companies.

Despite the policy also provides for oil companies to comply with environmental measures, several reports have indicated that devastating environmental disasters in the oil fields.

Media reports said this had led to serious health issues, including children born deformed, a high rate of miscarriage among women, mysterious illness and death of humans and animals due to contaminated water.

However, the Civil Society Coalition of Natural Resources have warned oil companies to adhere to the laws of the nation and consider citizens’ a priority in the course of doing their business.

“We know there are a lot of issues in the oil-producing states, survives are not there and the environment is being polluted. We need the oil investors to mind their commitments and provide services to locals,” urged Charles Onek, Chairperson of the Civil Society Coalition of Natural Resources.