South Sudan’s government said it granted Oranto Petroleum International Ltd. a license to explore for oil in a block covering three states in the East African nation that may contain “vast” deposits of oil.

Oranto, a closely held Nigerian company, will share the block with South Sudan’s state-owned Nile Petroleum Co., Petroleum Minister Ezekiel Loi Gatkuoth told reporters in the capital, Juba. Lagos-based Oranto plans to invest $500 million on exploration and development of the project, it said in a separate statement.

“They will immediately start exploring this block,” Gatkuoth said. “We believe petroleum products in Block B3 are vast.”

Block B3 is part of Block B, which the government says is the country’s largest untapped oil deposit. The 120,000 square-kilometer (46,332 square-mile) area was divided into three portions by the government in 2012, according to Oranto. Block B3 covers 25,150 square kilometers and while some aeromagnetic and seismic data have been acquired for the area, no wells have been drilled, it said.

“The block is highly prospective, with productive parts of the Muglad Basin to the northwest and estimated reserves in place of more than 3 billion barrels of oil,” the company said. “The block is categorized as low risk, high reward.”

The company will work alongside partners in blocks B1 and B, which include Total SA of France, it said.

Crude production in South Sudan plunged by at least a third to about 130,000 barrels a day since conflict erupted in December 2013. The decline, combined with a drop in prices, has devastated the economy, with annual inflation accelerating to almost 500 percent and gross domestic product forecast by the International Monetary Fund to contract 6.1 percent this year after shrinking 13.1 percent in 2016.

The agreements signed on Monday include for exploration, production and profit-sharing, with Oranto taking 90 percent and Nilepet 10 percent, Gatkuoth said.

Source: Bloomberg


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