AOP talks to Bol Ring Mourwel Kon, Managing Director of Nile Drilling & Services Co., about the importance of bringing new equipment into South Sudan and the competitive landscape in the country.
Nile Drilling & Services is South Sudan’s first locally owned and run petroleum drilling company. Founded as a joint venture of national oil company Nilepet, Nile Drilling is 51-percent publicly owned. The recently established company will receive its first workover rig in 2017, with more workover rigs and drilling rigs on order for 2018.
What is the status of your operations in South Sudan today?
Recently we signed a purchase agreement for a new work-over service rig and we have been given 90 days to mobilize the rigs from China to Port Sudan and to the oilfield at Paluch. We expect our first workover rigs of 650 horsepower to be put into service in 2018. Even if we bring the drilling rigs now, it still requires a lot of planning to mobilize them. You have to fully understand the strategy of the operating companies to make sure that you have a viable business. If you have a rig on standby and no business, then you are losing money, and that’s a big risk.
We could potentially sign a letter of intent with Dar Petroleum for this 650-horsepower rig. We already have two contracts with Dar Petroleum Operating Company (DPOC), and we are implementing them. We are going to receive one drilling rig and two workover rigs under this new purchase agreement.
Why is it so important to bring new rigs into South Sudan?
When Sudan and South Sudan split, according to their Cooperation Agreement the two countries agreed thaat facilities in the south would remain in the South Sudan and those in the territory of Sudan will be owned by Sudan. The rigs in the oilfields that we inherited were old. They should be decommissioned. So we are bringing new rigs because you cannot take the old ones offline without having something new in place. We expect that when we bring our own rigs, we can go out and immediately condemn the old ones.
What competition will exist in the drilling industry once Nile Drilling begins operations?
In terms of the exploration and production sharing agreements, our parent company Nilepet is a partner to the joint operating companies (JOCs). The other shareholders in the operating companies also have their own service companies, so there is a lot of competition.
When the bidding process begins, you make sure that you are credible. The principle of the bidding process is that you cannot force operating companies, even part government owned companies, to select one service provider or another. In a bid, you have to compete with everyone, from the international companies to the local companies. If you get the business, then you rightfully earned it. What we want is to include key performance indicators (KPIs) for each company in the bid criteria. Each bidder should at least be doing business in a professional way.
When you engage in a bidding process, you are competing on price and the KPIs of each company. We started this company to reduce the cost of drilling and services for JOCs operating in South Sudan. Nile Drilling belongs to the government, so the cost has to be reduced, but we are not going to force this. We are going to compete normally with other companies. We are now planning to train our local companies and give chances to the local companies that will compete with international companies across our borders. This is why we will have fair competition, and why we will support local content. This is most important for us.
We can also move our rigs outside of this region, and that is our intention, to go to Kenya or Uganda.
What would be your message to potential investors in South Sudan?
Investors have to know the real information on the ground. They rely on an international media, and they could be intimidated because of the news of high security threats. Talking to investors at conferences and organizations, asking them to come to South Sudan – this is going to be the first step to open the door to investors. There are still virgin areas where nothing has been done, and we would like investors to know that there are many blocks now available for exploration. They should come and explore. The government is open to fair competition. There are also opportunities in the downstream, with development of refineries and managing local consumption. These are areas of high business where investors should focus, and come to work. The idea is to empower the economy of South Sudan.