South Sudan government on Monday signed a production sharing agreement for an untapped exploration block with South Africa.
South Sudan’s oil minister, Ezekiel Lol Gatkuoth and South Africa’s Energy minister, Jeff Radebe signed the Exploration Production Sharing Agreement (EPSA) for Block B2, which lies in greater Jonglei State.
Speaking at the occasion held in the capital Juba, Radebe said South Africa has committed $50 million for exploration.
He said South Africa was also interested in building a pipeline and refinery, bringing their total projected investment to $1 billion, according to a Memorandum of Understanding signed in November.
Block B2 was once part of a 120,000 square kilometre area known as Block B, which was divided into three licenses in 2012 and is thought to be rich in hydrocarbons although very little drilling has been done there.
South Sudan has one of the largest reserves of crude in sub-Saharan Africa, only a third of which have been explored.
But oil production plummeted when the conflict erupted in December 2013. A September peace accord is largely holding but a plan by rival political leaders to form a new unity government by May 12 has been extended.
In April, the Director General for Petroleum at the Petroleum Ministry, Awow Daniel Chuang was quoted saying production was expected to reach around 195,000 barrels per day by the end of the year, from 175,000 at present, and rise to 220,000 barrels per day by early 2020.
South Sudan, where oil revenues make up nearly 98 percent of the budget, has been reeling an under economic crisis due to civil war.