A consortium led by China National Petroleum Corporation (CNPC) has made a significant oil discovery in South Sudan, writes Iain Esau.

According to Awow Daniel Chuang, the country's Minister of Oil, the discovery in Block 3 in Upper Nile state is estimated to hold about 300 million barrels of oil.

"We are looking at over 300 million of reserves with (the) hope of more discoveries because there are two more wells that are under review," the minister said.

The unnamed exploration well was drilled to a total depth of 1320 metres near the Adar oilfield in the Melut basin and hit oil in Miocene sands.

Development of this discovery - which lies close to Ethiopia's border - is likely to be fast-tracked as a tie-back to the nearby Adar production facilities.

Oil from Adar is sent to a central processing plant at Paluoch, which also handles production from the Gumry, Teng, Mishmat, Abyat and Moleeta-Mooz fields.

From the Paluoch plant, crude is piped north to Port Sudan on the Red Sea coast.

However, South Sudan is said to be considering alternative export routes including a pipeline across Ethiopia to Djibouti or a link-up with Kenya's Lamu Port-South Sudan-Ethiopia Transport (Lapsset) corridor project.

The new oil discovery was part of a 50-well drilling programme this year instigated by Dar Petroleum Operating Company (DPOC) covering Block 3 as well as the adjacent DPOC-operated Block 7.

DPOC comprises CNPC on 41%, Petronas of Malaysia with 40%, local player Nilepet holding 8%, China’s Sinopec on 6% while Cayman Islands incorporated Tri-Ocean Energy has a 5% interest.

Nj Ayuk, executive chairman at West African law group Centurion, said: “Such a large discovery confirms the huge potential of South Sudan… just before the country launches a new licensing round in October."

Earlier this year, in a move to diversify its investor base, the Juba-based government signed an exploration and production sharing agreement for prospective Block B2 with South Africa’s Strategic Fuel Fund.

DPOC is one of three consortia operating in South Sudan.

Greater Pioneer Operating Company operates blocks 1A and 1B, which contain the oil-rich Unity field.

This consortium consists of CNPC (40%), Petronas (30%), ONGC Videsh (25%) and Nilepet (5%).

Sudd Petroleum Company controls Block 5A and its shareholders are Petronas (67.8%), ONGC Videsh (24.2%) and Nilepet (8%).

Recent reports suggested ONGC is re-evaluating its investments in South Sudan.

Weekly

South Sudan oil discovery