LONDON, May 18 (Reuters) - South Sudan must not enter into any new oil prepayment contracts until it has cleared outstanding debts with commodity trading house BB Energy, London's high court ruled on Friday, pending another hearing on June 5.

BB Energy last year began legal action through the London courts to challenge South Sudan's alleged failure to deliver oil it purchased under prepayment deals in 2024 and 2025.

There will be a further hearing on the ruling on June 5, the court document seen by Reuters reads, as the initial hearing was held without defence lawyers. 

Up until that date, or sooner if South Sudan clears its debts, South Sudan "must not accept new pre-payments or enter into any arrangement that has the effect of being a prepayment, from any third party in relation to any cargo of Dar Blend or Nile Blend crude oil," the penal notice reads.

The ruling adds that any other person knowing of the order who does anything to permit the defendants to breach the terms could also be held in contempt of court and could be imprisoned, fined or have assets seized.

The case against South Sudan reflects the risks commodity traders take when entering prefinance agreements to secure oil offtake.

South Sudan Ministry of Petroleum Undersecretary Santino Ayuel Longar and government spokesperson Ateny Wek Ateny did not immediately respond to Reuters' request for comment.

BB ENERGY ALLOWED ONE COURT INJUNCTION TO EXPIRE

Last November BB Energy had let a court injunction expire on a specific South Sudanese oil cargo after reaching an agreement to resolve its claims amicably with the Ministry of Petroleum. 

BB Energy loaded a first cargo in February this year as part of the prepayment contract from 2025, but it said it has not received any oil to load since.

"This Court Order is a positive and important step as it should help ensure that more crude cargoes remain available for the Republic of South Sudan to honour its commitments to BB Energy, rather than being allocated under further pre-payment arrangements with third parties," a spokesperson for BB Energy said.

(Reporting by Robert Harvey in London and Nairobi newsroom; editing by Barbara Lewis)

By Robert Harvey