South Sudan Considers New Pipeline Route to Boost Oil Exports

South Sudan and China National Petroleum Corporation (CNPC) are discussing the idea to build an alternative oil pipeline from the landlocked African country to Djibouti via Ethiopia to boost export capabilities, the presidency has said.

The statement came during the visit of South Sudan’s President Salva Kiir to China and the CNPC offices to discuss reforms in South Sudan's oil sector, “including improving oil production through establishing a new refinery and building distribution networks.”  

Kiir also took part in the 1st South Sudan-Zhejiang Economic, Investment, and Trade Forum, where he invited Chinese companies and potential investors to explore some of the untapped investment opportunities in South Sudan, the government of the African oil producer said.

During talks with CNPC in China, an alternative pipeline through Djibouti via Ethiopia was proposed, aiming “to enhance export capabilities of expanding extraction in Blocks 3 and 7.”

CNPC holds 41% of Dar Petroleum Operating Company, the biggest oil operator in South Sudan.

CNPC assured the South Sudanese president that the Chinese state oil corporation would work closely with the local teams in the development of infrastructure projects and continue oil exploration in the country.

South Sudan’s oil exports have plunged since the beginning of the year. The country is struggling to get any money in its budget as its oil exports, on which it depends for 90% of state revenues, are stalled by a ruptured pipeline in neighboring Sudan that is currently the only outlet for South Sudan to sell its crude. 

In March, Sudan declared force majeure on crude oil exports from its landlocked neighbor South Sudan, following a major rupture in the pipeline carrying crude from South Sudan to a port in Sudan in an area with active military activity.   

The latest conflict in Sudan erupted in April last year, when the Rapid Support Forces (RSF), a paramilitary group, took up arms against the Sudanese army in the capital Khartoum.

Many of South Sudan’s oilfields cannot send their oil north via the pipeline in Sudan and revenues for South Sudan are plummeting.

By Tsvetana Paraskova for Oilprice.com

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