Despite holding the third-largest oil reserves in sub-Saharan Africa, until recently, South Sudan did not have an operating oil refinery in-country, therefore relying heavily on regional refined product imports to sustain its growing economy. With the compensation agreement with Sudan set to end in March 2022 – stipulating that South Sudan will compensate Sudan for the loss of oil production revenue and the destruction of pipeline infrastructure caused by the civil war – the country is considering alternative production options to reduce fuel imports and increase domestic refining capacity.
Under the administration of the unity government, South Sudan is set to capitalize on its immense resources, reducing high import levels and establishing energy independence through the development of four oil refineries. In a bid to establish the country as a heavy fuel exporter, the South Sudanese Government has announced plans to construct four oil refineries in the Bentiu, Paloch, Thiangrial and Pagak regions. Through these developments, South Sudan is expected to dramatically increase its refining capacity, meet domestic fuel demand, increase the export of refined products and stimulate further upstream and downstream activity across the country.
Of the four refineries, the $100-million Bentiu Refinery is the only project to have commenced operations. Located in Unity State, the 10,000-bpd refinery represents a joint venture between Safinat and South Sudan’s national oil company Nilepet, in which the production of diesel as well as a small quantity of petrol for local consumption has been initiated. Meanwhile, the Paloch refinery, owned by Trinity Energy Ltd., comprises a $500-million crude oil refinery plant located in the Paloch region of South Sudan. The plant is expected to have an initial capacity of 40,000 bpd, with expansion options to produce approximately 200,000 bpd. Trinity Energy is currently tying up project preparatory work financing from the African Export-Import Bank, which will assist in the engineering and design of the facility, and is planning to have the plant operational within two to three years. The last two proposed refineries include a 60,000-bpd refinery located in Pagak and a 10,000-bpd refinery located at Thiangrial in the Upper Nile region. Both refineries are under construction with operational dates yet to be announced.
One of the primary advantages of South Sudan’s refinery development involves the abundance of feedstock options and associated rapid increase in refining capacity. The country currently holds a 90% reliance on oil revenues for its economy, and without sufficient refining capacity, has resorted to importing substantial volumes of petroleum products. The development of domestic refineries will, therefore, kill two birds with one stone, so to speak. Firstly, with the abundance of feedstock options available in the country – approximately 3.5 billion barrels of recoverable oil, not to mention unexplored acreage – and the compensation agreement coming to an end, an increase in refining capacity will enable South Sudan to fully utilize and monetize its raw resources, generating in-country value and meeting domestic fuel demand. Secondly, it will significantly reduce import volumes, allowing the country to retain revenue otherwise lost to regional suppliers. In turn, South Sudan can increase revenue generation, boosting socioeconomic growth and establishing the country as a major regional competitor in its own right.
As development of the four refineries moves forward at various paces, South Sudan is positioning itself as a regional refined product supplier, with energy independence at the forefront of its industry revival. In addition, as the country seeks to initiate an economic recovery following both a civil war and the COVID-19 pandemic, developments that pivot the country towards sustainability and energy security are being prioritized. The planned boost in refining capacity will initiate a domino effect on further exploration and production initiatives country-wide. Accordingly, South Sudan is open for business and is actively pursuing partnerships with both regional and international players interested in capitalizing on the country’s abundant investment opportunities.
Africa Oil & Power (AOP) will host the fourth edition of the South Sudan Oil & Power (SSOP) 2021 Conference & Exhibition in Juba on June 29-30, organized with the support of the Ministry of Petroleum, Ministry of Energy and Dams, Ministry of Trade and Industry, Ministry of Labor and African Energy Chamber. Under the theme, #BuildtheNation: Capital Raising and Innovative Financing to Build Critical Energy Infrastructure Projects, SSOP 2021 seeks to drive capital investment into hydrocarbons, infrastructure, power generation and technology. To find out more about the event, please visit www.ssop2021.com and contact AOP Senior Director James Chester directly at email@example.com