Petronas files lawsuit against South Sudan over blocked $1.25B oilfields sale

A unit of Malaysia's energy giant Petronas has filed a lawsuit against South Sudan, alleging that the country blocked its planned $1.25 billion sale of oilfields to Savannah Energy and instead took control of the assets.

State-controlled Nile Petroleum Corporation — NilePet — earlier in August assumed control of Petronas’ South Sudan assets, and stated it was seeking a new partner to continue operations, News.Az reports citing foreign media.

“Petronas International Corp has initiated arbitration proceedings at the International Centre for Settlement of Investment Disputes on the divestment of its operations in the Republic of South Sudan,” the company was quoted by local media, declining to comment further due to the ongoing arbitration proceedings at the World Bank agency.

Petronas International Corporation Ltd versus the Republic of South Sudan (ICSID Case No. ARB/24/36) cites the respondents as the Ministry of Justice and Constitutional Affairs, the Ministry of Petroleum, and the Ministry of Presidential Affairs, all located in Juba, South Sudan.

Petronas’ request for the institution of arbitration proceedings was registered on 23 August, according to ICSID’s website. The legal challenge is said to relate to South Sudan’s Investment Law of 2009.

Upstream has approached Petronas for independent comment.

Subsidiary Petronas Carigali Nile Limited (PCNL) on 7 August announced it was withdrawing from South Sudan after several decades. The move held talks with the UK-based oil and gas company Savannah Energy plc to purchase its assets.

PCNL’s assets in the African nation comprised 40%, 30% and 67.9% in Block 3/7, Block 1/2/4 and Block 5A, respectively, in the prolific Muglad basin. It had interests in more than 60 producing fields, with gross production in 2021 averaging 153,200 barrels per day. Oil is exported north to Sudan's Red Sea coast via dedicated pipeline infrastructure.

Petronas at the time said its decision was made following a two-year period of divestment initiatives in alignment with the company’s long-term investment strategy amid the changing industry environment and accelerated energy transition.

“PCNL will continue to work with all relevant stakeholders to ensure an amicable transition while being mindful of the rights of its employees, in accordance with applicable laws, petroleum agreements as well as Petronas’ policy and procedures,” the parent company said on 7 August.

Malaysian media reported that Petronas’ decision to exit South Sudan came on the back of increasing costs due to the damaged pipeline that delivers about two-thirds of the nation’s crude oil through neighbouring Sudan to the Red Sea.

News.Az