South Sudan mulls total oil shutdown after deadlock with Sudan
July 22, 2024 (JUBA)- South Sudan is considering a total shutdown of its oil export through Sudan, citing a lack of consensus amid the dwindling financial resources in a country where civil servants are without salary for months.
“There are varying views. Some are advocating for a total shutdown of the oil because it is only benefiting the rival factions in the Sudan conflict. Others are saying let us manage with whatever little that we continue to get from the flow but clearly, what comes from the oil now is close to nothing. It goes into obligations and leaves nothing for paying salaries,” a senior South Sudanese official at the country’s Petroleum told Sudan Tribune in an interview on Monday.
The official, who preferred anonymity, was commenting on the situation of the repair and maintenance of an oil pipeline that had ruptured but not yet repaired.
According to the official, less than 140,000 barrels continue to be exported and not meeting an obligation, adding that oil for roads and oil for cash has cost the country millions of dollars in loans which the government is unable to reimburse.
“This is why we have gone for 9 months without paying salaries of our civil servants while the oil continues to flow, actually less than 140,000 barrels is being exported now. When you take the operating expenses of the oil companies from this, you find that nothing is left. It does not cover expenses”, explained the official.
He added, “This is the situation. It is a push against the hard wall”.
Revenues from oil export account for more than 90 percent of South Sudan’s annual budget and thus of total shutdown of the oil would exacerbate tension.
The official also cited lack of consensus among the warring parties over sharing of oil revenues.
While South Sudan President Salva Kiir tries to maintain relations with the warring parties in Sudan, officials in his administration have repeatedly argued that such relations are detrimental to the economy of the country.
Neither the Sudanese Armed Forces (SAF) nor the leadership of the Rapid Support Forces (RSF), a paramilitary group appear to understand the situation in which South Sudan has found itself in its conflict.
A landlocked country, South Sudan depends on Sudan for transport of its crude oil to the international market for sale.
Mohamed Hamdan Daglo, leader of the paramilitary RSF excluded South Sudan when he went on a regional tour after spending several months in the theatre of war following the eruption of the conflict in the middle of April 2023.
The group perceives south sudan as standing by the side of the military, citing the use of the country as a haven to treat the wounded and receive those military leaders from east and south Darfur as well in western Kordofan who withdrew from the battlefields and taken to Port Sudan.
The military on the other hand has complained of South Sudan having allowed the group to use its territory as where properties stolen in the conflict are sold and as one of the countries from which the group sources its supplies.
South Sudan officials have revealed that RSF has advocated placing oil fees in an escrow account until after the end of the war. It portrays itself as the safeguard of the oil infrastructure to be paid security fee which South Sudan has been paying under the table, placing a burden on its economy. The military on the other hand continues to take transit fees, rejecting the handling with RSF and presenting itself as the legitimate authority.
The situation has been compounded by a disruption caused by a rupture in one of the oil pipelines from the Melut Basin oilfields in the Upper Nile state to Port Sudan. This pipeline normally transports about 60 percent of oil production. The breakdown occurred after the Sudanese company operating the pipeline – Bashayer Pipeline Company, or BAPCO – was unable to deliver diesel to a pumping station that keeps the waxy Dar blend of crude sufficiently heated to prevent it from congealing into an asphalt-like substance.
The pumping station is one of many along the pipeline under RSF control, while BAPCO operates under the control of the military leadership.
A clog in the pipeline north of the station was discovered in February 2024, causing a halt and shipment of 600,000 barrels due 22-23 February. Technicians managed to flush the pipeline but discovered a rupture in another pumping station. On March 16, the Sudanese ministry of Energy declared force majeure on the pipeline, saying Sudan couldn’t meet its contractual obligations to South Sudan.
Negotiations involving oil companies, South Sudan, and the Sudanese rival sides to the conflict, the military, and the rapid support force have not yielded and the two sides continue to restrict access to the sites. Attempts to flush the pipeline remotely with chemicals and pressure have only caused more ruptures and other damage.
Technicians at South Sudan’s Ministry of Petroleum have expressed that the length of time it has taken without being checked would require a complete replacement of the parts of the pipeline affected the by rupture.
However, sources with direct knowledge of the situation have ruled out the likelihood of the resumption unless the two rival sides in the Sudan conflict are put under pressure by the partners in the oil sector.
Optimism that repairs could take place even amid the war, even if the two sides cooperate, indicates it could take time. Spare parts will have to be procured and shipped to the site from outside, suggesting it would procedure in the supply chain. A delay could exacerbate the economy in South Sudan which is currently under economic stress and could bring not only hardship but also political turmoil to a country already wracked by war, corruption, and climate induced flooding.
(ST)