MALAYSIA, 27/08/2024 (Asia News Channels) - A division of Malaysian energy conglomerate Petroliam Nasional Bhd (Petronas) has filed a lawsuit against South Sudan, alleging that the country obstructed the sale of its assets valued at US$1.25 billion (RM5.43 billion) and instead seized control of its operations.
Earlier in August, South Sudan’s state-owned Nile Petroleum Corp took over Petronas’ oil fields and assets in the country, effectively reclaiming the investments made by the Malaysian company. Nile Petroleum announced that it plans to find a new partner to continue operating the oil fields.
In response to inquiries, Petronas International Corp confirmed that it has initiated arbitration proceedings at the International Centre for Settlement of Investment Disputes (ICSID). The company declined to provide further comments due to the ongoing arbitration case at the World Bank agency.
South Sudanese officials, particularly from the petroleum ministry, did not respond to requests for comment on the legal dispute.
Petronas made its formal exit from South Sudan on August 8, ending nearly three decades of presence in the country. Its involvement began long before South Sudan declared independence in 2011. Petronas had been in discussions with UK-based oil and gas firm Savannah Energy Plc regarding the sale of its assets.
The Malaysian company cited rising operational costs as the main reason for its departure. The conflict in neighboring Sudan, ongoing for over a year, has caused damage to a critical pipeline that transports two-thirds of South Sudan’s crude. A rupture in the pipeline, triggered by a lack of diesel to thin the crude oil, compounded the difficulties.
The situation escalated further after South Sudan’s undersecretary of the petroleum ministry, Chol Deng Thon Abel, sent a letter on August 5 accusing Petronas of legal violations. Abel’s letter claimed that Petronas had failed to conduct an environmental audit and had not compensated for damages. It also accused Petronas of issuing an ultimatum to the South Sudanese government, demanding it name a buyer for the company’s assets.
Petronas refuted these claims, calling the government's actions "arbitrary, unreasonable, and unlawful," according to Azahari Shuid, a senior general manager at the company.
Petronas first began crude extraction in the region in 1997 as part of a consortium led by Sweden’s Lundin Oil AB. Lundin's former leadership, including CEO Alexandre Schneiter and chairman Ian Lundin, has since been indicted by Swedish authorities for complicity in war crimes committed by the Sudanese regime during the civil conflict that ultimately led to South Sudan's independence.
Human rights organizations, including Human Rights Watch and the European Coalition on Oil in Sudan, have long claimed that foreign oil investments have exacerbated the conflict in South Sudan, contributing to widespread abuses.
-- ASIA NEWS CHANNELS