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DOSSIER |
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Sudan and South Sudan: A Tale of Two Oil Producers
The 2023-built crude oil tanker ELANDRA SWALLOW
Poten added that “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. The key to Sudanese oil exports (both Sudan and South Sudan) is the Greater Nile Oil pipeline, which commenced operations in 1999. This pipeline stretches 1,000 miles from the Unity and Helig oil fields in South Sudan to the Bashayer export terminal on the Red Sea, south of Port Sudan. The pipeline is capable of carrying 250,000 b/d, but the fighting in Sudan has caused frequent disruptions”. As a result, “in February of this year, South Sudan declared force majeure on several cargoes, because a rupture of the pipeline halted exports. Repairing the pipeline is difficult, because it runs through territory where the Sudanese army and the RSF are fighting. As a result of the disruption, exports from Bashayer have dropped from 195,000 b/d in January 2024 to 63,000 b/d in April. The government of landlocked South Sudan is evaluating potential alternative pipelines to ports in Djibouti or Kenya, but this would be expensive and take years to build”, Poten noted. Meanwhile, “the Houthi attacks on commercial shipping in the Red Sea are another risk factor for the Sudanese and are probably a contributing factor to the decline in exports. The Bashayer terminal in Sudan is in the Red Sea, so exports from there can go either north, through the Suez Canal or south through the Bab ElMadeb Straits, which is under attack by the Houthi’s. Unfortunately for the South Sudanese, the vast majority of their customers are in the Middle East and Asia. Routing these export barrels through the Suez Canal is highly inefficient and expensive, while the alternative route is dangerous. The largest customer of the South Sudanese is the UAE. Over the last four years, they have taken about 50% of their oil. The two countries have a close bilateral relationship. Various sources reported that in December 2023, a UAE company agreed to lend $12.9 Billion to South Sudan in exchange for oil. This deal, which was negotiated on the sidelines of the COP28 climate change summit in Dubai would run for 20 years. Other customers of South Sudan include Malaysia, Singapore and China. Smaller volumes are going to Italy. Almost all shipments of Sudanese and South Sudanese are done on Aframaxes and Suezmaxes. These are the segments that would benefit if the security situation in the country improves, and the pipeline can be fixed. However, as long as the Houthi’s threaten shipping in the Red Sea, significant challenges will remain and Sudan’s exports could remain restricted for the foreseeable future”, Poten concluded.
Source : Nikos Roussanoglou, Hellenic Shipping News Worldwide
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