South+Sudan+Petroleum+and+Natural+Gas

Executive Summary:
South Sudan contains the third largest oil reserves in Sub-Saharan Africa after Angola and Nigeria, making it a prime target for Chinese investors. South Sudan exports nearly all of its crude oil to Asia. South Sudan is auctioning off 10 new exploration blocks by the end of 2013. Since South Sudan only broke away from Sudan in 2011, taking 75 percent of its oil with them, there are many new opportunities for China to invest. South Sudan wishes to produce 350,000 barrels of oil by the end of December 2013; CNPC has been involved in Sudan since 1996, investing over USD 5 billion to date and managing South Sudan's 930 mi pipelines through Sudan to the Port of Sudan, although South Sudan is investing in two new pipelines to avoid Sudan dependency. While there are proved reserves of natural gas in the Muglad and Melut basins, South Sudan does not produce or consume marketed natural gas, making it highly unlikely there will be Chinese investments in natural gas over the next five years.

Discussion:
South Sudan petroleum now is the third largest reserves in Sub-Saharan Africa, a fact Chinese investors know and will not ignore. In September 2013 South Sudan pumped 240,000 barrels per day, which is 50,000 more barrels per day then two weeks prior; however South Sudan wishes to produce up to 350,00 barrels of oil a day by December 2013. South Sudan also wishes to auction licenses for an undetermined 10 new petroleum exploration blocks. CNPC pumped South Sudan's oil through its 930 mi pipelines through Sudan to the Port of Sudan at the expense of over USD 5 billion since 1996 until January 2012 when Juba shut down its production when a dispute over a pipeline occurred. Production resumed in March 2012 and no serious problems arose until April 2013, where Sudan accused South Sudan of using oil to back rebels, which South Sudan denied. Early September 2013 the situation resolved, however the oil fields will continuously cause problems for the South Sudanese government and therefore Chinese petroleum investors. Both Sudan and South Sudan leaders realize that oil is the basis for both countries development, stability and security.

More than 100 businessmen and women from South Sudan visited China's southern city of Guangzhou for the Canton Fair, or the China Import and Export Commodities Fair. The delegates, composed of professionals in the fields of banking, engineering, medical equipment, oil and gas, water and sanitation, electricity and power, as well as from small-scale businesses, toured the fair and held group meetings with representatives from Chinese companies. Chinese investors look to continue to keep friendly ties with South Sudan by inviting them to events such as these.

Most of Sudan's and South Sudan's proved reserves of crude oil and natural gas are located in the Muglad and Melut basins, which extend into both countries. Natural gas associated with oil fields is flared or re-injected. Both countries currently do not produce or consume marketed natural gas.

**Analytic Confidence: **
Analytic confidence for this assessment is high. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise, worked alone but collaborated with a team, and did not use structured analytic methods. The subject is moderately complex and the deadline was moderately difficult to meet.


 * Analyst**: David Bott