Long absent from the investment scene of what used to be a united Sudan because of international sanctions, American companies are now bidding for their share of South Sudan’s oil sector.
Black Rhino Group, a New York-based infrastructure-development company, wants to build a $3 billion refinery in South Sudan. According to Black Rhino President Dan O’Shea, the company signed a “framework agreement” in August with South Sudan’s government for the proposed 50,000 barrel a day facility.
The refinery would be located in Upper Nile state, which is where the majority of South Sudan’s, currently operational, oil concessions are located. O’Shea said it would take about three years to build and cost $2 billion to $3 billion to construct. He added that the planned refinery “is intended to fill the gap to supply the local market in full” and that a “significant amount of refined products” could be shipped to Ethiopia in exchange for electricity that would power the facility.
He expects that a final accord would probably be signed in the second quarter of 2014.
South Sudan exports approximately 220,000 barrels a day from its oilfields via pipelines across Sudan. It wants to build refineries to make it less dependent on its northern neighbour and wartime foe in Khartoum. The refinery would also help South Sudan save on foreign exchange when buys diesel from neighbouring countries.
The country imports as much as 40 million litres (10.6 million gallons) of fuel a month from Kenya according to Paul Adong Deng the managing director of state-owned Nile Petroleum Corp. About 80 percent of imports are diesel and 20 percent gasoline. Other refineries are already planned in the oil-producing states of Unity and Upper Nile.
The first a 5,000 barrel a day facility in Bentiu, is a joint venture between Nile Petroleum and Russia’s Safinat. Construction will begin by the end of 2013, said Russian Ambassador Sergei Shishkin. South Sudan has sub-Saharan Africa’s biggest oil reserves after Nigeria and Angola, according to BP Plc data.
South Sudanese oil is low-sulfur crude, which is prized by Japanese buyers as a cleaner-burning fuel for power generation. Japanese firm Toyota is also looking at building a pipeline in the landlocked country.
Mainly China National Petroleum Corp., Malaysia’s Petroliam National Bhd. and India’s Oil & Natural Gas Corp pump the oil. Although not an oil production company, if the deal goes through, the Black Rhino refinery it would mark a significant investment by an American company.
