Petronas deem South Sudan adopted legislation excessively restrictive.
South Sudan has enacted numerous pieces of law to better collect financial resources and grow its oil sector, which some international firms deem excessively restrictive.
Last week, Malaysia’s state-owned oil company, Petronas, reassessed its position in South Sudan, casting doubt on the country’s future. The firm said a few days after the South Sudan Oil and Electricity Conference (June 29-30) that it may not participate in the next licensing cycle due to challenging market circumstances.
This statement comes as the Ministry of Oil has urged international operators working in the country to comply with the 2018 Local Content Policy if they want to stay in business. Companies that do not comply with the rules, which require the purchase of products and services produced in South Sudan, employment, training of South Sudanese, and the transfer of technical abilities, knowledge, skills, and know-how to locals, will be shut down by the government.
It’s worth noting that the South Sudanese government also holds the business responsible for failing to honor its environmental obligations. Petronas is responsible for the country’s most severe pollution scandals. The Ministry of Oil recently threatened to withdraw oil firms’ operating licenses if they did not follow environmental regulations.
“In light of the current market environment, Petronas is conducting a strategic assessment of its assets to ensure that its portfolio remains robust and economically viable. As a consequence, Petronas may not be able to participate in South Sudan’s first round of licencing this year,” the firm stated.
Petronas, one of the country’s biggest oil producers, uses relatively few local businesses for subcontracts, and numerous labor organizations accuse it of paying foreign staff more than local employees.