$2 Billion Oil Opportunity For South Sudan

South Sudan is preparing to form a shared government to end five years of conflicts. Being the third largest crude reserves in Africa. In December South African government pledged to invest $1 billion in oil exploration including of a refinery plant. Petroliam Nasional Bhd of Malaysia has pledged to put a further $300 million into its operations, while Oranto Petroleum International Ltd. Of Nigeria has wagered $500 million on developing an oil block, and local firm Trinity Energy has pledged $300 million. Gatkuoth said Russian, Spanish and Emirate companies may soon join them.

“I would say early next year we would be having exploration, production and sharing agreements signed to have new players in the oil industry,” he said in an interview in the capital, Juba. “The narrative has changed from South Sudan being in war” to “South Sudan is coming back again.”

Oil has been the main source of government income for South Sudan, it has been an integral part of the conflict that have claimed almost 400,000 lives and caused a regional refugee crisis since December 2013. During the war as insurgent targeted facilities the production fell by at least a third, while a drop in global prices fed an economic crisis.

Last September a peace deal was reached between President Salva Kiir and rebel leader Riek Machar, oil again has a leading role. Sudan is suffering from its own economic turmoil gets vital revenue by exporting the landlocked South’s crude via its pipeline to the Red Sea.

“The peace deal makes the oil investments possible,” said Alex De Waal, executive director of the World Peace Foundation at Tufts University in Massachusetts. “The oil investments should then generate enough money to make the political-market share out of the benefits workable.”

Currently the oil output is 155,000 bopd after last December restarting of the country’s northern Unity field. It is expected to increase to 200,000 bopd with further investment and production is expected to increase. Security forces will protect the oil installations and workers while investors will be given unspecified tax-grace periods.

If Sudan can keep united the oil crude could be helped stabilizing their economics.