South Sudan stands to benefit from regional cooperation and collaboration as neighboring countries demonstrate an increasing interest in developing economic and diplomatic relations. By capitalizing on these connections, South Sudan can accelerate investor interest, spur its growth and influence, and utilize its strategic positioning to boost its energy sector.
Deals Already Done
Regional cooperation can spur investment in South Sudan’s energy sector, already made evident through several key developments:
- In September 2020, South Sudan signed an agreement with Qatar that establishes diplomatic relations. The deal paves the way for increased development in South Sudan and cooperation between the two nations.
- South Sudan signed a Memorandum of Understanding (MoU) with Egypt’s state oil company, the Egyptian National Petroleum Corporation, at the 2019 South Sudan Oil & Power event. The MoU outlined proposed regional cooperation in the field of downstream oil and gas and not only reaffirmed regional relations but confirmed Egypt’s investor interest in South Sudan.
- South Africa’s state-owned oil company, Strategic Fuel Fund (SFF), signed an exploration and production sharing agreement (EPSA) with South Sudan in 2019, in which SFF would operate Block B2 with the Ministry of Petroleum and South Sudan’s national oil company Nilepet as partners. The agreement allows South Africa to further establish energy security and was significant for South Sudan’s exploration activities – representing the second EPSA since the country’s independence.
- The development of the Lamu Port South Sudan-Ethiopia Transport Corridor Project (LAPSSET), an infrastructure project that aims to connect the East African countries of Kenya, Ethiopia and South Sudan, could massively impact regional growth. The project would include the development of an oil pipeline between South Sudan and Ethiopia which will not only enable South Sudan to fully exploit and monetize its reserves, but will diversify options and open up a new infrastructure and energy front in the south east of the country.
- South Sudan signed a cooperation agreement with Sudan in December 2019 in which the existing oil revenue sharing and transit deal was extended until March 2022. This deal is significant for South Sudan, which severely lacks energy infrastructure, and for Sudan, which relies on pipeline revenues.
Egypt Makes Moves
Egypt has become a significant partner for South Sudan. With several ongoing projects within South Sudan, Egypt is building on cultural and historic ties, plus regional politics, to expand its interests and export its services with South Sudan as a strategic partner. Notable Egyptian projects in South Sudan include the 20 MW Juba Solar Project, for which Egypt’s Elsewedy Electric was awarded the project contract in 2019; proposed river transportation systems; hydraulic modelling of river flow data collection; and an ongoing road building project.
Egypt has demonstrated a desire for further cooperation with a presidential visit to Juba in November 2020. Egyptian President Abdel Fattah al-Sisi’s visit, the first for an Egyptian president since South Sudan’s independence, aimed to strengthen bilateral relations between the two nations. The presidential visit demonstrated Egypt’s commitment to expanding its influence in the Nile basin countries, protecting its water supply and providing important commercial expansion avenues for its companies.
Why has Egypt become such an important partner for South Sudan? In addition to existing projects, Egypt can assist South Sudan in optimizing its oilfields and exploring new territory. Egyptian companies have experience with both onshore oil production and water management in the oil field, vital for South Sudan’s industry, as well as infrastructure building and financing experience. With a highly engaged embassy in Juba, Egypt is focusing efforts on assisting Egyptian companies in South Sudan.
With other emerging oil markets such as Uganda, Kenya, and Somalia being developed regionally, South Sudan stands to benefit from its position as a major player in oil and gas. And while it courts investment from regional markets, its own companies are looking beyond South Sudan’s borders for opportunities. Regional collaboration can encourage productivity and market growth in which South Sudan is poised to be a leading presence, offering advice, and exporting services to its neighbors. The building of regional relations, in particular with Cairo and Middle Eastern neighbors further afield, will further establish South Sudan as a strategic location for regional actors and investors.