South Africa’s R15 billion oil push in South Sudan to begin in November

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South Africa will kick off its planned $1 billion (R15 billion) investment in South Sudan’s oil sector around November, an official said, part of a drive to boost crude output that’s dwindled after years of conflict.

“They were supposed to be here last year but the issue of Covid-19 stopped everything,” the undersecretary of South Sudan’s Petroleum Ministry, Awow Daniel Chuang, said Monday by phone. He didn’t give further details on how the agreement made in 2018 will be enacted.

The two state-owned companies South Africa's Central Energy Fund and South Sudan's Nile Petroleum Corporation signed the agreement.

According to the deal, South Africa will build a refinery and pipelines, and the money will also go towards oil exploration and training of workers and engineers.

South Sudan does not have its own refinery.

In 2019, former energy minister Jeff Radebe said that the planned refinery would be able to produce 60 000 barrels of oil per day.

Radebe said that South Africa is pursuing an oil deal to manage fluctuating oil prices. South Africa will secure the oil directly from South Sudan. The $1 billion investment will be spread out over 10 years.

Rapid decline in production

Chuang also said his country will shortly resume talks with neighboring Sudan on ways to increase output after Sudanese protesters ended a blockade that halted shipments of the landlocked south’s oil over the weekend.

Revitalising oil production is crucial for the East African nation that has few other sources of revenue and is trying to implement a peace deal to end a civil war that erupted in 2013. Chuang said in July that the country’s output has dropped rapidly after producing blocks hit peaks and began to decline.

Now the port stoppages on Sudan’s Red Sea coast are “being resolved, we are going to resume the talks and see how we can increase crude production” from the current rate of 156 000 barrels per day, Chuang said.

Demonstrators in eastern Sudan had blocked shipping facilities for several days, ostensibly to protest local components of a peace deal Sudan’s government is trying to enact with opposition movements nationwide. 

The move threatened the economies of both South Sudan, whose oil is sent to world markets via its neighbor’s pipelines, and of fuel-importing Sudan, which receives transit fees.

- With assistance from Simon Marks. Additional reporting by Fin24 and AFP

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