Downstream

In South Sudan, a private company has big ambitions to expand energy infrastructure

By

Since its establishment in 2012, Trinity Energy has grown into South Sudan’s largest independent energy business. The company is the first local entity to be registered to lift crude oil from South Sudan and has become one of the pillars of the country’s energy security. Its trading arm currently exports South Sudanese oil before re-importing finished petroleum products into the market. In March 2022, Hawilti spoke with Founder & Chairman Akol Ayii about South Sudan’s recovery prospects and Trinity Energy’s expansion plans. 

How do you assess South Sudan’s recovery prospects in 2022? 

The past two years have been challenging due to the headwinds presented by the COVID-19 pandemic. Besides the shutdowns in South Sudan as a market, there were also significant logistical challenges in importing petroleum products due to border shutdowns during the pandemic. This is because the majority of our refined products’ supplies are from the surrounding East African markets. 

Needless to say, Covid-19 has impacted the demand for petroleum products in South Sudan, and altered the timeline of key projects within the energy sector, including that of our own refinery. 

That said, the historic recovery of crude oil prices is now providing a boost to the country’s economy because oil revenues account for about 30% of the government’s budget. We expect a trickle-down effects across other sectors throughout 2022 and 2023. 

In the year 2020/21, the Government hadalso made strategic investments in thebuilding or roads and highways. We arenow starting to see the positive impact ofsuch infrastructure spending across theeconomy.

Meanwhile, we remain optimistic that as a result of the peace agreement and the implementation of the Government ofNational Unity, the business environment in South Sudan will continue to improve.In 2021, the IMF estimated South Sudan’s real GDP growth at +4.5%, with the forecast for this year revised upward to+6.5%. This maintains the country as one of Africa’s fastest-growing economies. 

As the economy recovers, where do you see most investment opportunities in the oil & gas sector? 

Oil revenues represent on average 25-30%of South Sudan’s budget so the sector iscritical to the wellbeing of the economy.The government has maintained itsambition to restore crude oil productionto pre-conflict levels of 350,000 barrels ofoil per day (bopd), which wouldsignificantly boost economic growth. 

The energy security policy of the countryis two-folded: on one hand enhanceexploration activities and bring more oilwells into production, and on the otherset up South Sudan’s own petroleumrefinery. 

As part of efforts to boost upstream activity, the country’s first licensing round since independence was launched in 2021. It is anticipated to be an economic accelerator spurring investments by international oil investors and service companies into the country’s emerging oil and gas sector.

In that context, what updates do you have on Trinity Energy’s expansion plans? 

Trinity Energy has already invested closeto $13m in the roll-out of its current retailnetwork of 20 fuel stations in SouthSudan. Our focus has been and remains onconstructing and acquiring an additional100 outlets in the country within the next4 years. We plan for 40 of these stations tobe in Juba, while the other 60 stations willbe spread in all the 10 states across SouthSudan. 

As a key proponent of the Intra-Africa trade, we are also actively pursuing growth opportunities in East, Central, andSouth Africa. We already have a presence in Kenya and recently entered theDemocratic Republic of Congo. Moving forward, we are developing opportunities in Malawi, Somaliland, and Uganda and are launching four new fuel retail stations in Nairobi in the first quarter of 2022. 

Another significant component of ouractivities is aimed at expanding ourstorage facilities in South Sudan. Wecurrently own 6 million litres of fuelstorage at our depot in Nesitu, with anadditional 2 million litres of storage underdevelopment. To further support ourgrowth strategy, we will be constructingan additional 50 million litres of storagecapacity in Koda, just outside Juba. Wehave also engaged Nilepet for theconstruction of a storage terminal inBentiu.

We target to leverage these storage facilities to supply petroleum products into neighbouring countries includingEthiopia, the Central African Republic, and the D.R.C.

Read more

We must provide Nigerian operators with a modular approach to gas commercialisation

by Kayode Adeleke, CEO, RusselSmith Nigeria has made significant efforts in reducing the flaring of associated gas over the past few years. However, we are still a long way from eliminating routine flaring in the country, and too much gas remains wasted and burnt into the atmosphere. Whilst commendable initiatives such as the Nigerian Gas Flare Commercialization Programme (NGFCP) have been put in place by the government to monetize associated gas, the private sector needs to step up and find new ways to build the processing and monetization infrastructure that we need to extract as much value as possible from our gas. Globally, the oil & gas industry has succeeded in finding ways to transform even the smallest quantities of gas into commodities such as diesel, naphtha, LPG, CNG, or LNG. With its vast gas reserves, Nigeria offers a fertile ground to adopt such innovations, and the Nigerian services industry has an important role to play in introducing world-class gas processing technologies to the Nigerian market. A key challenge to the elimination of flaring in Nigeria is the proliferation of flare sites across the Niger Delta, which have made it more difficult to access or aggregate gas. However, this challenge presents unique opportunities for service companies to deploy modular and small-scale gas processing solutions from an off-take as small as 2 MMscf/d. Nigerian services companies are particularly wellplaced to take on such a responsibility, given the strong capacity that they have built over the past decade. Their ability to attract and work with global technology providers can help turn the country’s gas into valuable commodities for its industries and its economy. Nigeria already has several success stories of local companies working with global partners to monetize flared gas. With the recent introduction of the Petroleum Industry Act (PIA), now is the time to build on these successes and take them to the next level. At RusselSmith, we see tremendous prospects in gas, from small to large scale developments. In order to support the decarbonization of upstream operations and increase the availability of key products such as cooking gas, RusselSmith, through its gas subsidiary, G2L Energy Solutions, is notably working with an international partner to offer new and modular gas-to-liquids technology solutions to the Nigerian market. Our commitment to improving gas commercialization is driven by a firm belief that the success of any industry depends on the ability of its service providers to be innovative and provide their market with sustainable solutions.

Sierra Leone embarks on 5th Offshore Licensing Round

In this interview, Director General of The Petroleum Directorate of Sierra Leone (PDSL), Mr. Foday Mansaray, discusses the announcement of the nation’s newest and most exciting Licensing Round and the potential to explore for oil and gas in Sierra Leone. What is the current state of the 5th Offshore Licensing Round and what can you tell us about the prequalified companies and the opportunities they bring to Sierra Leone? Sierra Leone’s 5th Offshore Licensing Round was officially launched on 18 May 2022 during the African Energy Summit at the Mayfair Hotel in London. The Licensing Round will close on 30 September 2022 during which all interested companies are expected to submit their bids. Prequalified companies will be issued a ‘Notice of Qualification’ and subsequently be invited for negotiations. Having officially launched on 18 May 2002, we have only just completed a comprehensive list of international oil companies (IOCs) who have been ‘Specially Invited’ to apply for prequalification, where The Petroleum Directorate of Sierra Leone (PDSL) assesses their complete financial, technical and HSE capabilities. This list has been compiled taking cognisance of the IOCs’ global reputation and operational history. We are very optimistic of forming a long-lasting partnership between Sierra Leone and any number of these companies. As we speak, we have received applications from 3 companies; anything decided in the meantime will be communicated to the oil and gas community at the conclusion of the Licensing Round, post 30 September 2022. What are the steps set by PDSL that a bidder must follow in order to participate, specifically with regards to in-country regulation? There are 10 very simple and transparent steps that we have devised for companies to follow. We anticipate that it will take 85 calendar days from application to the ratification of a license. The process would follow the following steps: ● Pre-qualification: a given IOC will submit a formal application for pre-qualification that includes their Work Program, Technical and Financial Capabilities, Health, Safety & Environmental Policies and Corporate Social Responsibility Plan; all must be submitted with supporting documents;● PDSL will evaluate the IOC’s application and then issue a ‘Notice of Qualification’ for the 5th Licensing Round within 10 Business Days;● PDSL will invite the IOC for negotiations;● A Provisional License will be granted to the IOC, upon successful negotiations;● The IOC will either accept, or decline, the Provisional License;● If accepted, a Draft Petroleum Agreement is sent to the IOC for ‘No Objection’;● The Draft Petroleum Agreement is sent to the Ministry of Finance, the Attorney General & The Ministry of Justice for ‘No Objection’;● PDSL and the IOC sign the Petroleum Agreement;● The Petroleum Agreement is sent to Parliament for ratification;● The Parliament ratifies the Petroleum Agreement. What effect has the Licensing Round, including fiscal terms and company benefits offered, had in the successful promotion of Sierra Leone and its energy market? The Licensing Round has showcased Sierra Leone’s competitive fiscal terms and predictable regulatory framework, which has attracted interest from various IOCs. The feedback we have received thus far has been very encouraging and positive, especially around the efficiency, simplicity and transparency of our application and awards process. What is very apparent is that the round’s launch has been timely, as Sierra Leone seeks to fill the energy gap created as a result of the global shortage of access to oil and gas. What is the expected growth for Sierra Leone’s upstream segment, and what recent highlights and milestones can you share with us? I wholeheartedly believe that Sierra Leone is on the cusp of joining other oil and gas producing nations. Given the success story along the conjugate margin in Guyana, it is only a matter of time until Sierra Leone joins this illustrious group. Since April 2021, Innoson Oil and Gas (IOG) has been progressing its exploration work program by conducting comprehensive studies and analysis of our seismic data, coupled with remote sensing studies. Moreover, on 13 May 2022, IOG announced an estimated recoverable resource of 8.2 trillion cubic feet of gas and 234 million barrels of oil in their acreage; IOG’s findings have also been independently corroborated by the Ryder Scott Company. We look forward to the next steps of their work program, which will lead to a drilling campaign in the near future. With a proven working petroleum system with 4 discoveries, from a total of 8 wells drilled throughout its history, we have all the elements required to maintain a petroleum system where hydrocarbons can be found, such as: ● A high-quality mature type-2 source rock with a Hydrogen Index (HI) of 482-795, and a Total Organic Carbon (TOC) of 4-20%. Guyana’s HI and TOC are 450-613 and 4-10% (at Liza-1), respectively;● A migration path;● A reservoir rock;● Stratigraphic and Structural trapping mechanisms; and● Effective seals. All these have been proven in our basin, so we’ll keep a close eye on it. In past years, what binational and private cooperation would you highlight that has brought prosperity to Sierra Leone, and what do you expect to see in the next few years? PDSL has existing bilateral agreements with GNPC in Ghana, as well as the Ministry of Mines and Hydrocarbons of Equatorial Guinea. These agreements will enhance capacity building and enable Sierra Leone’s petroleum sector to learn valuable lessons from these producing nations. We are also currently actively engaged with ANPG, PASA and GNPC-Gambia to create a pathway for collaboration between our nations. I firmly believe that collaboration with like-minded institutions will provide an excellent platform for us during our exploration, development and eventual production. Africa Oil Week’s (AOW) latest edition is scheduled for the first week of October in Cape Town. What does PDSL expect to achieve from its participation? PDSL has been involved in strategic promotion and marketing of Sierra Leone’s potential and petroleum opportunities. We are always on a mission to form strategic partnerships with IOCs who share our vision of transparency, performance-driven attitude, keen sense of collaboration and drive to become a net producer of