Nigerian explorer expects cost of producing crude to decline
South Sudan trying to revive oil industry after output slumped
Nigeria’s Oranto Petroleum International Ltd. plans to bet half a billion dollars that Africa’s newest nation can end a three-year civil war and create the conditions to revive its oil industry.
Oranto, a closely held company part-owned by the Eze family that also has assets in Equatorial Guinea and Nigeria, plans to invest $500 million to develop the oil block awarded by South Sudan earlier this month.
“We have faith that the differences in South Sudan will be brought to an end and that our exploration campaign will move smoothly,” said Oranto Chairman Prince Arthur Eze. “Over the medium to long term as South Sudan develops, security becomes stronger and export options increase, we expect the price of producing and operating in South Sudan to go down
South Sudan is bidding to double crude production that plunged by at least a third to about 130,000 barrels a day since conflict erupted in December 2013. That decline, combined with a drop in prices, saw the economy contract by about 13 percent last year, according to International Monetary Fund. While the war has claimed tens of thousands of lives and oil workers face the risk of kidnapping, the government is telling investors not to worry about security.
“The responsibility of Oranto is to bring investment and the responsibility of the government is to make sure that we protect their investment and the environment that they will be operating in,” Petroleum Minister Ezekiel Lul Gatkuoth said in an interview. “The president made it clear that protection is our number one priority.”
Oranto, along with sister company Atlas Petroleum International, holds licenses in 10 African countries. The company would consider partnerships with other operators to share infrastructure in South Sudan and is open to working with the government on a pipeline, said Eze.