South Sudan Oil

The fact that South Sudan has a reasonably buoyant oil industry with the Chinese eager to invest in it (given Sudanese oil is China's sixth largest supplier) it should be considered a plus for the newly emerged nation state of South Sudan. However 98% of the country's economy is financed by these oil wells and there's only one way to get it to the refineries in Port Sudan and that's through the pipelines in the hostile north. Indeed whilst previously oil revenues were split between the north and south, the south is now stating that the oil wells are its property and they should benefit from these assets.

The north has responded by stating that should South Sudan pursue this stance it will simply switch off the pipelines and effectively simultaneously switch off the country's primary source of income.

Whilst 85% of the population of South Sudan would probably not be affected by such a move as they make their living through agriculture it is the oil that pays for the government and equally importantly the army.

Given the fragile relationship between the north and the south, a well paid army is essential to maintain the very existence of the new state of South Sudan.

Equally, unless some agreement can be reached regarding oil revenues and fees for using the pipelines to Sudan's only commercial port, the north will face a massive financial blow with the prospect of food riots as its capacity to purchase imported food would be severely compromised.

Some have proposed that a new pipeline could be built in Kenya to obviate the need for the use of the north's pipelines, however, whilst this may be a longer term option, it would be massively expensive and not viable for many years although a recent deal has been agreed to do so.

It has also been proposed that a priority for the south should be to diversify its oil economy on which it is over reliant. Indeed it is estimated that oil production will peak in the next few years and oil reserves may well be depleted altogether within the next 30-40 years.

The Sudan oil situation has also spilled over into a border dispute fuelled by hostilities on either side. The oil rich town and region of of Abyei is at the heart of this dispute. It represents an area of some 4,039 square miles and in 2003 accounted for one quarter of Sudan's entire oil output, although this figure has since declined.

A referendum due in 2011 to establish whether the area should joined either the south of the north of the country was permanently postponed after agreement broke down on who exactly should be allowed to vote in the referendum. This video explores Sudan's oil tensions and how these tensions may either be a road to peace or further conflict.



 
 
 
 
 
 

South Sudan Oil Pipe Map

South Sudan Oil

South Sudan Oil

South Sudan Oil

South Sudan Oil

 


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South Sudan Oil

South Sudan Oil

Information and facts about oil supply and reserves in South Sudan and the impact of South Sudan independence.

 
 


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