The nationalization of the oil industry in South Sudan .. a serious step to boost the economy

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  • The state plans to nationalize the oil industry to boost revenue
  • Floods reduce oil production to 130,000 barrels per day
  • Lack of experience and funding led them to seek foreign aid
  • The plan to nationalize the oil industry will take 5 years

South Sudan is facing declining fossil fuel production, persistent floods, escalating conflicts and unrest, and a policy to secure the oil industry could help address and solve most of these problems.

In this context, Juba revealed last Friday, May 6, that it had begun taking steps to take over the operations of international oil companies in the country, in order to increase its share in revenue, even with the decline in production.

Deputy Secretary of the Ministry of Oil, Oo Daniel Chuang, stated that the ministry has started preparing to nationalize the oil industry and stop relying on foreign aid.

Nationalization of the oil industry

The plan, which will be implemented over the next five years, reflects the shift of several other African countries to play an important role in the oil and gas fields.

A worker inside an oil field in South Sudan – Photo via VOA

South Sudan is strengthening its role as a state-owned Nile Oil Company by acquiring assets as soon as contracts expire, according to Bloomberg.

Under-Secretary of State for Petroleum Oo Daniel Chuang said at the press conference last Friday, May 6, that his country will begin to nationalize the oil industry by using its experience for training, but it will continue to benefit from the skills of foreigners for a very short period of time in areas that do not have sufficient experience, so cadres acquire these skills.

Among the operators in the East African country are China’s National Petroleum Corporation, India’s OGNC and Malaysia’s Petronas.

Chuang added, “When we talk about local content, we mean to maximize benefits and increase workers in the oil industry as much as possible, but that does not mean it will be 100%, we have achieved 90% so far.”

He continued, “To reach this stage of nationalization will not take less than 5 years before we have engineers and quality managers, while information technology may take about 5 years.”

He also explained that the ministry has set up a geological data center to be used in training and technical operations, as part of the nationalization of the oil industry, according to the official Chinese news agency “Xinhua”.

Chuang believes his country will continue to use foreign powers, especially since oil production requires the presence of technology and knowledge, saying, “Even America does not have 100% domestic contributions.”

He referred in his speech to the government’s purchase of 3 aircraft to be used in geological mapping of the various regions in the country, and to facilitate their operations, a hangar was built at the airport.

low production

Despite these serious steps to nationalize the oil industry, South Sudan is struggling to rebuild its oil-dependent economy, following a devastating civil war and a fragile peace agreement signed two years ago.

The oil industry in South Sudan
Workers take a photo in the oil fields in Unity State – Photo courtesy of VOA

In addition, recent floods have limited oilfield production to 130,000 barrels per day over the past 3 years, compared to 350,000 barrels per day before the war.

Chuang explained that the risk of flooding will remain if precautions are not taken; His country therefore began to work with Egypt to build dams and streams.

During the presentation of the 2022/2021 fiscal budget before the National Transitional Legislative Assembly, Finance and Planning Minister Ajak Achoel Lual stated that the expected decline in oil production was due to the depletion of some oil resources, and the continuing floods. East African reported.

South Sudan received $ 1.4 billion in total oil revenues, including $ 1.1 billion in direct transfers, in addition to paying $ 148 million to Sudan to cover processing costs, transportation and transit fees.

According to the World Bank, South Sudan is the most oil-dependent country in the world, with oil accounting for almost total exports, and about 70 percent of GDP.

The wealth of South Sudan

South Sudan’s fortunes have long been linked to oil, and the discovery of oil in the late 1970s exacerbated tensions between Juba and Khartoum as the two sides fought for control of the region’s oil fields.

South Sudan ranks third in the oil reserves on the African continent with about 3.5 billion barrels, but about 90% of the oil and gas reserves are untapped.

After several years of separation, South Sudan is struggling to develop an oil industry, especially as the largest oil fields are located in its territory, but it lacks experience and financing; He thus became dependent on foreign aid.

The government has decided to hire engineers from China and Malaysia to produce and export crude oil to Sudan, where it processes and transports it to the world market.

South Sudanese government oil minister Pot Kang Chol believes his country’s dependence on foreign manpower is hampering its country’s full independence.

A study conducted by the Sud Institute in South Sudan, an independent research organization in Juba, revealed that a large number of local workers in oil companies are unqualified for the jobs.

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