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Kiir signs suspicious oil agreements to turn around fortunes of economy

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Workers reconstruct an oil pipeline in South Sudan. FILE PHOTO | AFP

Workers reconstruct an oil pipeline in Abyei area of South Sudan in 2013. President Salva Kiir has received offers for its oil worth billions of dollars that critics warn will mortgage the country and its resources for generations. FILE PHOTO | AFP 

By JULIUS BARIGABA

Posted  Saturday, April 15   2017 at  16:46

In Summary

  • International fixers are reportedly operating out of the regional capitals of Kampala, Nairobi, Addis Ababa as well as other African cities and some European capitals
  • Juba government is looking to new entrants and deals in its oil sector to boost oil production and provide an escape route from empty coffers.

Details on the progress and execution of these offers so far remain scanty, although the Oranto deal has attracted the most criticism in Juba.

Apparently, technical officials in the Ministry of Petroleum compiled and handed over a report to Petroleum Minister Ezekiel Lul Gatkuoth, indicating that Oranto lacked both the technical expertise and financial capacity to handle 90 per cent of the block.

In spite of the report, critics indicate that powerful figures and wheelerdealers in Juba were holding the government to ransom and pushing for the deal to be signed, regardless of any amount of criticism and queries over Oranto’s transparency and capacity.

Prince Arthur Eze, founder and chairman of Oranto Petroleum said his company is “at the vanguard of African firms exploring and developing African assets” but also hinted that the company would collaborate with “our partners to bring to light the immense potential of Block B3.”

Oranto is a subsidiary of Atlas Petroleum International Ltd, both forming the Atlas Group, a wholly owned Nigerian private firm.

“We believe the petroleum resources of Block B3 are vast. To reach our target of more than doubling current oil production, we need committed new entrants like Oranto,” said Mr Gatkuoth.

The sister companies of the Atlas Oranto Group own and operate 20 oil and gas acreages in 10 African countries in Benin, Côte d’Ivoire, Equatorial Guinea, Ghana, Liberia, Namibia, Nigeria, São Tomé and Príncipe, Senegal and South Sudan. Founded in Nigeria in 1991, the group is Africa’s largest domestic explorer by acreage.

But in a number of countries, Oranto has been cited in irregular deals that enabled it to get oil deals over the line, usually, acting as a middleman for big oil companies to whom it sells its exploration rights later on.

In 2006 and 2007, a report by the Liberian Auditing Commission named Oranto in a bribery scandal for allegedly paying a total of $118,400 to legislators as the company sought parliament’s approval to grant it the right to develop or sell concessions to bigger oil companies.

Oranto had negotiated production sharing contracts for three out of four concessions with the National Oil Company of Liberia (NOCAL) but the company needed parliament to ratify them before it could sell to another party, hence the bribes.

Rights to sell concessions
Once the lawmakers were handed the sweeteners, Oranto was granted the right to sell its three concessions to Chevron in 2010, and as of 2012, the US oil giant owned a 70 per cent stake in each of Oranto’s offshore blocks.

Industry watchdog Global Witness also says NOCAL awarded Oranto concessions without the oil prospecting firm ever putting in a bid, while in Mali, Oranto’s was one of a dozen exploration agreements cancelled in 2014 over “various offences.”

The manner in which the Nigerian firm acquired exploration blocks in Sao Tome and Principe was also characterised by irregularities.

By press time, Oranto had not responded to The EastAfrican over the issues of lack of transparency and the risks in investing in conflict-ridden South Sudan.    

Yet the Juba government is looking to these new entrants and deals in its oil sector to boost oil production and provide an escape route from empty coffers.
“The government is working hard to reinvigorate the petroleum industry in South Sudan by creating an enabling environment for international oil and gas companies to invest and operate. It is up to the oil companies to come in, explore and produce. Partnership is what fuels the oil industry,” said Mr Gatkuoth.

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