South Sudan and Sudan have recently taken steps towards restarting oil exports, signaling hope for South Sudan’s beleaguered economy, which has been severely strained by years of conflict and disruptions in oil production. With oil exports being a crucial source of revenue for South Sudan, any movement towards resuming these exports is of great significance, not only for South Sudan but also for Sudan, which benefits from transit fees on the oil transported through its territory.
Economic Challenges and the Impact of Oil Disruptions
South Sudan’s economy has been plagued by numerous challenges, particularly in the years following its independence from Sudan in 2011. The country endured a brutal civil war from 2013 to 2018, which caused a significant decline in oil production and export revenues. Prior to the war, South Sudan was producing around 350,000 to 400,000 barrels of crude oil per day, but by the time the conflict ended, production had dropped dramatically. Although the peace agreement brought some stability, the country’s fragile economy was left dependent on its oil industry.
Oil revenues account for almost all of South Sudan’s national income. The oil is exported through pipelines that run through Sudan, where Khartoum collects a transit fee for the transportation of crude to Port Sudan, a key hub for the global market. The relationship between the two countries, despite occasional political tensions, remains intertwined due to this economic dependence.
However, recent geopolitical tensions have compounded the difficulties. In 2023, Sudan was plunged into conflict as the Sudanese army clashed with the paramilitary Rapid Support Forces (RSF). This internal conflict in Sudan has had a devastating impact on South Sudan’s oil exports. Since February, the main pipeline that transports South Sudanese oil through Sudan for export has experienced frequent stoppages due to the instability and violence in the region. The disruptions have severely impacted South Sudan’s already fragile economy, cutting off its main source of revenue.
Steps Towards Restarting Exports
In a recent move, South Sudan’s authorities have announced plans to restart oil exports through Sudan. South Sudan’s Foreign Minister, Ramadan Goc, confirmed that efforts were underway to resume oil production and transportation, despite the ongoing conflict in Sudan. Engineers from South Sudan are expected to visit Sudan in the coming weeks to assess the readiness of the oil facilities and pipelines. This technical assessment is seen as a critical step in ensuring that the infrastructure is intact and can handle the resumption of oil flow.
Restarting oil production and export will be a complicated process, given the deteriorating security situation in Sudan. Both nations face challenges in ensuring the safe transportation of oil, as the ongoing conflict has left many key infrastructure points vulnerable to attacks or neglect. Additionally, the fluctuating nature of the war could lead to further disruptions even after exports resume.
Importance of Oil Exports to South Sudan
For South Sudan, resuming oil exports is crucial for the survival of its economy. With most of its budget reliant on oil revenues, the country cannot afford to lose its primary source of income for an extended period. The country’s daily oil production had stabilized at around 150,000 barrels per day after the 2018 peace agreement, and resuming production at this level would provide much-needed revenue. However, the long-term goal for South Sudan is to increase its production levels, potentially reaching pre-civil war levels of 350,000 to 400,000 barrels per day.
Furthermore, restarting oil exports will not only boost government revenues but also stimulate economic activity in related sectors, such as transportation, services, and local infrastructure development. It could also ease some of the economic pressures that have led to high inflation and instability in the country.
Regional Implications and Future Prospects
The resumption of oil exports is important not just for South Sudan but for the wider region as well. Sudan, despite its internal conflicts, relies on the fees it collects from South Sudan for the transportation of oil through its pipelines. With both nations economically tied to the oil industry, ensuring the steady flow of oil is critical for stability in the region.
While the steps taken by South Sudan and Sudan signal optimism, much will depend on the resolution of the conflict in Sudan and the ability of both countries to safeguard the oil infrastructure. The ongoing tensions pose a continuous threat, and any lasting peace will be key to sustaining the oil trade between the two nations. As engineers begin their assessment of the oil facilities, the region holds its breath, hoping for a positive outcome that could help stabilize both economies in the midst of conflict.
