Correction And Fact About South Sudan Oil Revenue Ownership, In Response To:
Longer Mathiec Wol, Researcher, On His Paper, Titled: “THE STATE OF OIL REVENUE AND OWNERSHIP IN SOUTH SUDAN”
Opinion | By Paul Tethloach Dak
July 18, 2020 (Thessherald)–After going through a piece of writing by the above mentioned writer, my eyes got caught-up with interest to correct some mischief, misquiding and denting information which the former has injected into public domain through Facebook pages and other media outlets; as part of “who owns the shares of oil revenue South Sudan petroleum industry”. This misquiding information deserve a response, hence, the public is not confused by some of these so called researchers. The role of a researcher is always to find fact; first by designing a methodology, collecting data, analyzing, and interpreting using various tools and techniques in order to draw a sound and final conclusion out of biases for the betterment of society or organization.
As per the the above writer, he had only collected the shareholders percentage allocation in Exploration and Production Sharing Agreement (EPSA), but what it’s, why it’s, and how it came to an existence felt-short to justified. He had only added up percentages of shareholders to 100% and 300%, then according to him boom; South Sudan lost revenue! This is mischief!
Yes, South Sudan oil and gas sector needs a serious approach of reform, but realistically this ought to be manned with true heart of nationalism, less emotional reaction and not exactly as was smeared by Mr. Longar Machiech, for wrongly pointing fingers on shareholders, legally has consequences. Therefore, it’s imperative to correct this mischief before public bought it.
In our country’s oil and gas sector; there is an agreement in place guiding the operationalization of this industry between the government of South Sudan and partners/ joint venture companies: namely, China National Petroleum Company (CNPC), PETRONAS- Malaysia, ONGC Vindish-India, Nilepet-South Sudan, at el: This agreement is called Exploration and Production Sharing Agreement (EPSA). It stipulates that, due to the fact that these above companies had contributed their capital/budget to invest by exploring the oil, drilling, producing , transporting and refining, plus salaries they are paying to their staffs and local staffs, then of course, all these spent multi millions of dollars must be paid back to them, and on top with a certain added profit as a gain… This kind of deal in the EPSA is called “Oil cost or operational cost”. And it’s 45% out of 100%.
What this implies is that, given any daily oil production of (100%), out of which 45% of this will go to those above mentioned partners, and 55% out of which remains to government of South Sudan government. For better clarity: assumed, the total daily production of South Sudan oil is 300,000bbl/day (barrels per day), so what this meant is: 45% going to partners in figure is equal to: 135,000bbl/day. And 55% going to our government is equal to: 165,000bbl/day
Now, after partners received their share, then they will go back and divide the sales generated according to who had contributed how much of money based on their shareholding percentages such as: 41%, 40%, 8%, 6%, 5%… and this shareholdership varying from company A, B, C.
But bear in mind that, this distribution amongst the partners has nothing to do with our government or doesn’t affect our 55% that was left to to our government be it Finance or ministry of petroleum.
Based on the above simple narrative, the writer only picked up what belongs to partners and missed to go deeper in his research to see what belongs to government of South Sudan (55%).
Yes, when it comes to the 55% remains to our government, one may raise his/her eye brows and ask many questions, but this is not the topic of the day.
However, there is of course a cheating and mismanagement exploited and being done by the partners and I am not exonerating them. Question always, remained unanswered is if partners, then take 45% as to pay back their initial investment capital cost; how much is that debt and when shall it be cleared by our country? This is the work of auditing department from the ministry and I believe, there is already a right answer for it.
Another area, where the partners are cheating us is that they brought to work in South Sudan expatriates staffs and paid them with at least a minimum of 20,000USD, while their top leaders earn 40,000-70,000USD monthly. And yet at the end of the day, these monies paid to expatriates/foreigners are being deducted/claimed back by the same partners from our oil through 45% of ‘oil cost’, with this keeps inflating and bloating the debt we owe them/partners rising up exponentially. Now, the more our debt to them kept building up without clearing, the longer they will remain dominating and having their footprints in South Sudan Oil and Gas sector.
Another area where the partners have cheated us is; even though the EPSA gives them shareholdership of 45%, it’s unfortunate that this is being miss-interpreted structurally in terms of how currently the employment structure is being set at the Joint Operating Companies (JOCs). This 45% shareholdership is meant to cut some oil sales and give it to partners as, way of compensating them for how much money the had spent but not the other way around of filling majority of top positions in our oil and gas sector. This is mischief!
Yes, currently, the partners may occupy some of these technical positions where is deemed, shall the capacity of local staffs is not developed to best level; nevertheless and at the same time, locals with at least technical know how should be embedded/overshadowed with these expatriates to train and learn from them such that gradually and progressively would be able to takeover those technical positions after five or ten years. Currently, this is not the case, and most locals remained redundant and barely are being sent for training or other Human Resource Development process. In other words, local are working to win breads but not prepared for future development.
Given this attitude of intransigency from partners and without a strong pressure to push them by our local authorities to comply with policies for better manpower development, then those higher positions in the join operating companies such as DAR, SPOC, GPOC, etc: occupied by expatriates such as Section-heads, Managers and GMs will remain under by partner X, Y, Z. This is unbecoming, else the partners will have their feet remain longer in South Sudan oil sector for years…
When studied the India EPSA in relation to how it works with partners in that country, it is clear that the position of president of any operating company must be a local/Indian person but vice president shall come from partners. But in South Sudan’s EPSA, it’s a reverse and only the vice president is given to us. A lot of work is needed here!
Income wise, most of the presidents from partners earn more than 60,000USD a month, while our vice presidents only earn 9,000USD monthly. Same is true, that an engineer from China or Malaysia in the drilling department earns 30,000USD a month, while his counterpart locally earns 1,500USD a month. Absurd, and this in comparison to other countries is unfair. And indeed more and more work need to be done. It’s only the ministry of petroleum and country’s concerned authorities should have a gut to rectify all these anomalies… We all deserve an equal and better treatment than foreigners!
In conclusion: The ongoing pollution in the oilfields, lack of better compensation to the local staffs, coupled with poor human resource development in this sector are undeniable facts which are acknowledgeable. However, our government is not 100% or 300% cheated by partners as was wrongly placed, so let facts remains respected.
The writer holds Bachelor in Petroleum Engineering, MBA Oil and Gas Management. And can be reached at: firstname.lastname@example.org