South Sudan’s state-run Nile Petroleum is set to assume ownership of Malaysian oil company Petronas’ assets in the country, after an expected takeover by Savannah Energy fell through earlier this month

Petronas officially withdrew from South Sudan on Aug. 9 after 14 years of operating in the country, citing various factors hindering its operations including the ongoing conflict in neighboring Sudan, an inability to ensure staff safety and mounting operational costs.

Speaking to S&P Global Commodity Insights Aug. 19, Nilepet’s managing director Bernard Amour said that his company would assume all assets and responsibilities held by Petronas in South Sudan.

Petronas’ local subsidiary held interests in South Sudan’s Blocks 3/7, 1/2/4 and 5A through partnerships with China’s CNPC and Sinopec, India’s ONGC and Nilepet. The projects pumped an average of 153,200 b/d of oil in 2021, according to Petronas.

Amour said that upon completion of the acquisition Nilepet would seek partnerships with other international companies to ensure the continuation of operations and expand output.

London-listed Savannah Energy had been seeking to acquire the Petronas assets in a $1.25 billion takeover, but the long-delayed $1.25 billion deal fell through Aug. 7 when the company said it was seeking revised terms.

Sources familiar with the transaction said Savannah was hoping to agree a revised deal structure that reflected the impact on the value of the assets from an outage on one of the country’s two oil export pipelines since February.

Land-locked South Sudan relies on the pipelines, which pass through Sudanese territory, to reach export markets, making a pipeline rupture on the 100,000 b/d crude export pipeline a significant logistical issue for its oil operations.

The pipeline outage has become one of the key factors snarling South Sudan’s oil production ambitions, with the ongoing war in Sudan complicating pipeline maintenance one year since its outbreak July 2023.

South Sudanese crude production peaked at 350,000 b/d after its independence from Sudan in 2011, but has since more than halved.

According to the latest Platts OPEC Survey from S&P Global Commodity Insights, the country produced just 40,000 b/d in July, falling far short of its ambitions to reach 300,000 b/d by 2030.