TRINITY ENERGY FORGES PATH TO SUCCESS IN SOUTH SUDAN

Trinity Energy is leveraging its experience in the South Sudanese market to embark on an ambitious growth and diversification strategy, as Ian Lewis reports

South Sudan’s leading oil products and marketing company may only have been formed around a decade ago, but in a country created in 2011 that makes Trinity Energy a veteran player. And it has come a long way. The company plans to leverage its knowledge of both the domestic market and the wider East African region to diversify beyond its dominant position in oil trading, storage and retail sales to become what its chairman Akol Ayii says will be the region’s first fully integrated energy oil company ( see interview on previous page).

The company already commands a 40% share of South Sudan’s market for petroleum products, sourcing imports from surrounding countries – principally Kenya – using its well-developed trucking network. In 2019, Trinity imported around 170m litres of automotive gas oil (AGO) and 30m litres of premium motor spirit (PMS).

A growing chain of petrol stations provides the company with its own outlets for these products, while Trinity’s ability to store petroleum products at its storage site near Juba helps keep supply steady in a country previously subject to severe fuel shortages.

Stimulating the economy

Trinity estimates that through its contribution to stabilising the supply of refined products in South Sudan, over 100 petrol stations that had been closed due to fuel shortages were able to re-open between May 2018 and December 2019. That not only helped to get the economy moving again, but also created significant employment opportunities.

In 2018-19, the company diversified its trading portfolio to include South Sudanese crude oil resources, making it the first indigenous South Sudanese company to do so.

Operating a business in the complex environment of a country struggling for stability after years of civil conflict has been challenging. Trinity’s success in navigating these uncertainties and expanding its business has won it financial backing from Afreximbank, which has supported Trinity’s petroleum products imports via a $30m loan facility since 2018. The success of the company in utilising this facility saw Afreximbank in July this year not only renew the facility, but expand it to $50m.

Last January former rebel leader Riek Machar was sworn in as vice-president by President Salva Kiir as part of a unity government, creating the prospect of improved political stability. Kiir has also introduced reforms designed to make the oil sector more efficient and improve transparency.

Trinity wants to take advantage of this better business environment to build up its operations and diversify into areas such as oilfield services and power generation.

Oilfield services ambitions

A move into upstream makes sense for the company. The oil sector is already the lifeblood of South Sudan’s fragile economy, accounting for 40% of gross domestic product and virtually all of the country’s exports.

The effects of the Covid-19 pandemic and seasonal floods curtailed oil production, which dropped from 185,000 barrels per day (b/d) in March to around 170,000 b/d in August. But the longer-term goal is to restore production levels to the 350,000 b/d seen before the country broke away from Sudan.

That will provide attractive opportunities for oilfield services companies, but Trinity also regards a move into the sector as a safeguard against disruption to supply to its planned 40,000 b/d refinery, close to the border with Ethiopia. By learning the nuts and bolts of the upstream business and assuming a role in nearby oilfields, Trinity can ensure it is in a position to keep the taps open so that oil keeps flowing to the refinery.

Building the country’s first refinery and associated infrastructure at a cost of up to $700m is an ambitious project, but one that Trinity thinks is feasible because revenues would not be dependent on sales to the stilltiny domestic market.

Ayii notes that there is little alternative refining capacity in East Africa at present and that Ethiopia alone has an estimated oil demand of around 75,000 b/d. “We would have a very solid offtaker to whom we can sell 80% of our output,” he says.

If the initial phase of the refinery, which Trinity hopes will be operational by the mid2020s, is a success, there are plans to be expand it to 200,000 b/d and beyond later on. ■