South Sudan is considering a new pipeline route to boost oil exports

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

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

Kiir also attended the first South Sudan-Zhejiang Economic, Investment and Trade Forum, where he invited Chinese companies and potential investors to explore some of South Sudan’s untapped investment opportunities, the government of the African producer of oil.

During discussions with China’s CNPC, an alternative pipeline through Djibouti via Ethiopia was proposed, with the aim “to increase export capacities to expand extraction in Blocks 3 and 7”.

CNPC owns 41% of Dar Petroleum Operating Company, South Sudan’s largest oil operator.

CNPC assured South Sudan’s president that the Chinese state oil corporation will work closely with local teams in developing infrastructure projects and continue oil exploration in the country.

South Sudan’s oil exports have fallen since the start of the year. The country is struggling to get money into its budget because its oil exports, on which it depends for 90 percent of state revenue, are blocked by a broken pipeline in neighboring Sudan, which is currently the only outlet for South Sudan to sell the crude oil.

In March, Sudan declared force majeure on crude oil exports from its landlocked neighbor, South Sudan, following a major rupture of a pipeline carrying crude from South Sudan to a Sudanese port in a military zone activate.

Sudan’s most recent conflict erupted last April 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 oil fields cannot send their oil north through the Sudan pipeline, and revenues for South Sudan are falling.

By Tsvetana Paraskova for Oilprice.com

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