South Sudan has reached a preliminary agreement to transfer former Malaysian oil company Petronas' shares in two oil-producing consortiums to Russian state-owned company Zarubezhneft. The Office of the President announced this development after a meeting in Moscow on October 29. Petroleum Minister Awow Daniel Chuang and Russian Energy Minister Sergey Tsivilev co-chaired the talks, which involved officials from both countries.
The meeting confirmed a preliminary agreement for the transfer of Petronas' shares in South Sudan's joint operating consortiums, DPOC and GPOC, to Zarubezhneft. A Memorandum of Understanding and Letter of Acceptance outlining the arrangement were signed at Russia's Ministry of Energy. The meeting took place on the sidelines of the third Russia-Africa Summit, held from October 26 to 31.
Petronas, Malaysia's state-owned oil and gas company, held a 40 percent share in Dar Petroleum Operating Company (DPOC) and a 30 percent share in Greater Pioneer Operating Company (GPOC) before announcing its withdrawal from South Sudan in 2024. The company was one of the country's major foreign oil investors, with interests in several petroleum operations.
DPOC operates oilfields in Blocks 3 and 7 in Upper Nile State, while GPOC operates Blocks 1, 2 and 4 in Unity State and the Ruweng Administrative Area. The two consortiums account for important parts of South Sudan's oil production. Zarubezhneft is wholly owned by the Russian state and has operated in the international oil and gas industry for over five decades.
Zarubezhneft's areas of expertise include developing complex oilfields and using enhanced oil-recovery technologies to increase production from existing reserves. NilePet said the Russian company's experience in improving output from mature fields, developing infrastructure and training local workers made it suitable for the consortiums.
The proposed transaction is viewed as a historic development for both countries, opening the way for deeper economic, technical, cultural, and investment cooperation between South Sudan and the Russian Federation. Oil provides most of South Sudan's government revenue and export earnings. However, production has been affected by ageing infrastructure and repeated disruptions to the export pipeline through Sudan.
The presidential statement did not disclose the financial value of the proposed transfer, the precise shareholding to be acquired by Zarubezhneft or when the transaction would be completed. The agreement is preliminary, and further details on the transfer and the approvals required to finalise it have not been announced.
Key points
- South Sudan reaches preliminary agreement to transfer Petronas' oil shares to Zarubezhneft
- Zarubezhneft to acquire Petronas' shares in DPOC and GPOC
- The transaction expected to deepen economic cooperation between South Sudan and Russia
