(Bloomberg) -- Oil companies pumping crude from South Sudan, including a unit of Malaysian oil and gas giant Petroliam Nasional Bhd, should restore the environment after years of widespread degradation, according to a government official.
Campaigners have for years complained that oil leaks, heavy metals, chemicals and salts used in the extraction and processing of crude oil have leached into the soil, causing extensive health issues for the population.
The complaint comes amid an arbitration suit against South Sudan by Petronas International Corp. The nation accuses the Malaysian oil giant of failing to carry out an environmental audit and paying damages to local communities when it abandoned its operations last month.
“There are a lot of issues around this and it has to be addressed and this is one of the areas where there is headache between the government and the investment companies,” Investment Minister Dhieu Mathok said in an interview. “That is the real situation. It is not just Petronas alone.”
Petronas has been exploiting the resource alongside China National Petroleum Corp., Sinopec Corp., Tri-Ocean Energy Co. and South Sudan’s Nile Petroleum Corp. The group known as Dar Petroleum Operating Co. accounted for about 70% of the nation’s output before war in neighboring Sudan grounded operations.
Petronas said there are regular audits and depending on findings, “continuous improvement and mitigation actions are undertaken.” Spokespeople from the other four operators didn’t respond to emailed requests for comment.
Birth Defects
The industry released 8.3 million tons of salt, 7.9 billion liters of well-drilling fluids including lead, nickel and cadmium, and 6 million liters of crude into South Sudan’s soil between 1999 and 2020, according to a study by environmental campaign group Sign of Hope.
The contaminants affected communities in the oil-producing regions severely, depriving them of their rights to clean water, health and life, according to the group. “We have many cases of deformities, a child being born without some body parts,” Mathok said.
South Sudan’s government must “demand compensation and ensure Petronas is held accountable for their lack of compliance with environmental requirements,” said Edmund Yakani, executive director of anti-graft lobby Community Empowerment for Progress Organization.
The worst pollution was around the Unity and Tharjaith fields operated by Petronas and CNPC, according to Kor Chop Leek, a researcher with Sudd Environment Agency, who’s investigated the nation’s crude-production industry since 2019.
Petronas is exiting the region after three decades as the rupture of the biggest of two pipelines dries up exports of the 150,000 barrels the nation produced daily. The company is seeking arbitration, saying South Sudan obstructed a $1.25 billion sale of its assets and instead confiscated them through NilePet.
“They decided to leave the country for reasons best known to them, which we believe is their right,” Mathok said. “But also we believe that the government of South Sudan should not lose that much from its investment.”
(Updates with comment from Petronas in sixth paragraph.)
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