Overview of Hydrocarbon Regulation in South Sudan

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In December 2011 at the International Engagement Conference for South Sudan in Washington, President Salva Kiir announced that the Financial Management and Accountability act had been passed, with the aim of strengthening the process of accountability and ensuring transparency in the management of their resources.[1]

He also announced that his Government will implement the EITI (Extractive Industry Transparency Initiative), the global standard for transparency of natural resource revenues.[2]

South Sudan Petroleum Bill 2012

With independence in July 2011, the South Sudanese government drafted a new petroleum policy that includes a petroleum bill. According to the Ministry of Petroleum and Mining, the bill has 21 chapters and 98 sections covering petroleum upstream activities in South Sudan. The bill states that ownership of petroleum is vested in the people, to be managed by the government for their benefit. The bill emphasizes maximum recovery within a framework that seeks to ensure safety, security and protection of the environment and require transparency, accountability and ethical behavior on the part of both licensees/contractors and the government.[3]

According to the Ministry of Petroleum and Mining, the bill continues the Exploration and Production Sharing Agreement (EPSA) contractual regime, with certain key provisions of these agreements made part of the legislation. The bill also establishes a licensing regime for reconnaissance activities, installers and operators of transportation systems (including pipelines), based on an open and transparent bidding process. The safety and environmental regime puts primary responsibility on the contractor to identify hazards and manage the risks of operations; the bill also endorses the concept of local content, encouraging companies to use South Sudanese workers to fill skilled and unskilled positions. The bill also affirms the Ministry of Petroleum and Mining as the ministry responsible for administration, implementation and enforcement of the bill, with some approval powers vested in the National Petroleum Commission.[3]

Current status

In April 2012, the South Sudan National Assembly (SSNA) passed the petroleum bill into its third reading after undergoing deliberations. Main issues of concern that prolonged debate over the bill, according to the Gurtong Trust, were related to how the bill addresses transparency in the petroleum sector, and how information related to oil exploration in the country in managed. Environmental management by all companies involved was also a concern.[4]

A section which, according to Gurtong, received wider cricitism by many ministers of parliament (MPs) was section 11(3) (I) of the bill, which states: “Make available to the public both on the Ministry website and by any other appropriate means to inform interested persons in the following areas;

  1. All key oil sector production,
  2. Revenue and expenditure data,
  3. Petroleum agreements and licenses,
  4. Regulations and procedures related to the petroleum sector.”

According to Gurtong, some MPs within the National Assembly argued that not all institutions should be allowed to access information about the oil sector as outlined above, since the information could lead to misunderstanding. MPs resolved, according to Gurtong, that with the exception of the National Assembly, any authority in need of related information in the oil sector from the government should be cleared by the Information Ministry first.[4]

Members of the National Assembly also raised concerns over the percentage of shares distributed from the federal government in Juba to the states and communities where oil is discovered and explored. As of April 2012, the bill indicated that the states and communities where oil is produced should be allocated 3 percent and 2 percent of net petroleum revenues, respectively.[4]

References

  1. "South Sudan’s Kiir promises accountability and transparency to promote investments" Sudan Tribune 15 December 2011.
  2. "President of South Sudan commits to global transparency standard" EITI website 21 December 2011.
  3. 3.0 3.1 "Oil Investment Conference" Ministry of Petroleum and Mining, March 2012.
  4. 4.0 4.1 4.2 "SSNA Ascends Petroleum Bill To Third Reading" Gurtong Trust 4 April 2012.