23 May 2024 POTEN & PARTNERS
Domestic turmoil and regional tensions restrict oil exports.
Sudan and South Sudan are two countries in Northeast Africa. They were one country until 2011, when South Sudan seceded and became independent following a referendum. The political situation in the region is very unstable. Since April 2023, Sudan is engulfed in a civil war between the military government and the opposition Rapid Support Forces (RSF) a paramilitary unit. The situation in South Sudan is also fragile.
Two years after South Sudan’s independence, a civil war broke out, which ended in 2018. Tensions remain between the government of South Sudan and rebel opposition groups although a recent peace initiative gives hope that the situation could improve. Both Sudan and South Sudan are oil producers. The main producing fields are on both sides of the border. Because of the oil, the two countries are in a mutually dependent economic relationship. South Sudan possesses 75% of the oil reserves, but Sudan controls the pipelines and the export terminal to transport the oil to the international market.
Oil companies started searching for oil in the late 1950s, but it took until 1977 before Chevron found commercial quantities of oil. By the early 1980s, the country produced 12,000 b/d. Other companies obtained concessions, but the exploration and production of oil were hampered by the almost total lack of infrastructure and by the civil war in the South. When rebels attacked the main Chevron base in February 1984, killing four employees, the company pulled out of Sudan. Several months later, the French major Total also shut down its operations. The situation changed dramatically in the early 2000s. Production quickly ramped up to 475,000 b/d in 2009. However, since the independence of South Sudan production has suffered. By the early 2020s, combined production was down to 220,000 b/d, with 70% (160,000 b/d) coming from South Sudan.
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