Sudan declares force majeure on South Sudan’s oil Exports due to war
March 19, 2024 (JUBA) — On February 10th, 2024, Sudan announced a force majeure on South Sudan’s crude oil exports, citing restricted access to oil operations caused by ongoing military activity.
The declaration from Sudan’s Ministry of Energy and Petroleum dated March 16, seen by Sudan Tribune, details a “gelling incident” in the pipeline between pump stations 4 and 5. Due to the war, the area is inaccessible, preventing operators from delivering the diesel needed to heat the oil and prevent it from solidifying. Low temperatures further increased the risk.
Additionally, communication issues arose because the Rapid Support Forces (RSF) shut down telecommunications during military operations, preventing contact with Pump Station 4.
“Force majeure” refers to unforeseen events that prevent a party from fulfilling a contract. In this case, Sudan is unable to meet its obligation to deliver South Sudan’s oil through the pipeline network to the export terminal due to the war.
South Sudan’s economy depends heavily on revenue generated from crude oil transported through Sudan for international sale. The ongoing war in Sudan raises concerns about the sustainability of these exports.
Military activity has caused access challenges at some pump stations, while others face difficulties receiving necessary supplies. According to South Sudanese officials and a watchdog group, this situation threatens stability in East Africa.
Pipeline rupture and damaged infrastructure
Further complicating the situation, a separate February report from S&P Global Insights revealed that the Dar Petroleum Oil Company (DPOC), a major oil producer in South Sudan, declared force majeure due to a ruptured pipeline in Khartoum.
The pipeline damage coincides with the ongoing war between the Sudanese armed forces and the RSF. South Sudan relies entirely on Sudan’s infrastructure, including pipelines, refineries, and the Red Sea port of Port Sudan, to export 150,000 barrels of oil daily.
A Bloomberg report from February indicated that the war has significantly damaged Sudan’s oil infrastructure, including the key Al-Jaili refinery, further jeopardizing South Sudan’s oil exports.
South Sudan’s Information Minister, Michael Makuei Lueth, addressed oil flow issues in February. He reported that some pipelines transporting South Sudan’s oil to Sudan were experiencing a “gelling process,” where oil solidifies during shutdowns, making restarts difficult.
Even if the oil reaches Port Sudan, additional challenges exist. According to Lueth, attacks by Yemen’s Houthi rebels in the Red Sea could prevent the oil from being shipped for sale.
(ST)