Minister stresses on need to build less costly refinery in South Sudan
The Sudan’s state minister of Energy and Mining, Mrs. Angelina Teny, stressed the importance of conducting a proper feasibility study in pursuit of building a less costly oil refinery in Southern Sudan.
The semi-autonomous region has embarked on building its first ever oil refinery for its huge oil reserves as the clock ticks towards referendum on secession in January 2011.
The government is in urgent need to indigenize the operations of the oil sector so that it is not “caught up” in case its people choose secession in 2011.
The South Sudan ministry of Energy and Mining last month presented to the Council of Ministers a project for oil refinery to be built in a place called Akon in Warrap state.
The refinery project targets the crude oil produced in Block 5A in Unity state and its implementation cost is expected to be around two billion of US dollars.
The government also directed the Energy and Mining minister to discuss with any interested major oil companies the possibility of building refineries at the sites of the oilfields in Upper Nile and Unity states.
Mrs. Teny on Tuesday advised that it was important for the Southern Sudan oil ministry to conduct feasibility study in some other locations so that the implementation of the project can be achieved without spending too much money unnecessarily.
She explained that the project would need pipelines as the safer means of transporting crude oil, but added that it was very costly to do that while ferrying it by land is hazardous to the environment.
The state minister further explained that there were different types of crude oil with varying needs of treatment which should have been put into consideration.
Sudan currently produces more than 600,000 barrels of crude oil per day which bring tens of millions of US dollars from the international market on daily basis.
Most of the oil is produced from the oilfields located in Southern Sudan, particularly in Unity and Upper Nile states, while the current country’s refineries are all located in Northern Sudan.
About 98% of Southern Sudan’s overall revenues that constitute its annual budgets come from the 50% share of the oil produced in the South in accordance with the 2005’s North-South peace deal that ended the 21 years of war.
The huge Warrap refinery project, which is expected to take about three years to complete from the date it kicks off at the construction sites, will begin by establishing a Joint Venture Company (JVC) with any oil companies interested to partner with the government.
The next step would be to find financiers to fund the project and then the JVC would finally sign a contract with a national or international company that will implement the project on the ground.
To transport the crude oil to Akon refinery site in Warrap state the Company will also construct a pipeline of some hundreds of kilometers long from the Unity state oilfield.
The Government of Southern Sudan will have the biggest share in the $10 million worth JVC ownership body and the share will be represented by the Southern Sudan indigenous Nilepet oil company.
The government has however also expressed its willingness to sell some of its shares to local partners in the region.
After formation of the JVC and securing of funds, the Company would then advertise the project to any interested national and international companies that would be subjected to competitive bidding process and out of which a winner will sign a contract with the JVC to technically implement the project on the ground.
Tens of thousands of indigenous people of the poverty stricken, but recovering Southern Sudan are expected to benefit from the project as they will be employed to do most of the labor work at the construction sites.
The landlocked semi-autonomous region also embarks on a separate project to build an alternative pipeline from Southern Sudan to Port Mombassa in Kenya for transporting the crude oil to the international markets.
Currently the crude oil from Unity and Upper Nile states is being transported through the thousands of kilometers long Chinese-constructed pipeline to the international market via Port Sudan in the far North-eastern part of the country.
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