Malaysian oil and gas company Petronas has taken legal action against South Sudan for blocking the sale of US$1.25 billion in assets and seizing control of its oil fields.
South Sudan's state-run Nile Petroleum Corporation recently took over the field and announced plans to find a new partner to maintain operations.
Petronas, which has been involved in oil extraction in the region since 1997, initiated arbitration proceedings at the International Center for Settlement of Investment Disputes, which is conducted at the World Bank agency.
The company decided to exit the South Sudan market on August 8 following rising operating costs and challenges such as a damaged key pipeline used to transport crude oil.
The government of South Sudan also accused Petronas of violating the law, including not conducting an environmental audit and failing to pay compensation for damages.
However, Petronas denied this claim by describing the government's actions as arbitrary and unreasonable.
This legal conflict marks the end of Petronas' nearly three decades of involvement in South Sudan. A relationship that began long before the country achieved independence in 2011.
The case highlights ongoing tensions over oil resources with concerns about the impact of foreign oil exploitation on South Sudan's protracted conflict.
