South Africa’s Minister of Energy Jeff Radebe with his counterpart in South Sudan has announced plans to invest US $1bn in South Sudan’s energy sector including construction of a refinery.
The two ministers signed a memorandum of understanding (MoU) which will also involve South Africa taking part in the exploration of several oil blocks.
“What we have signed is the cooperation between our two national oil companies, Nilepet and South Africa Energy Fund then from there the funding will come from Central Energy Fund (CEF) of South Africa,” Ezekiel Lol Gatkuoth said.
South Sudan’s oil sector
South Sudan oil ministry said that the funds from South Africa will be used for the refining and processing of oil and gas, research and development and the transfer of technology. The refinery to be constructed is expected to have a capacity of 60,000 barrels of oil per day.
South Africa would join Asian firms including China National Petroleum Corporation (CNPC), Malaysia’s Petronas and India’s Oil and Natural Gas Corporation (ONGC Videsh) in the south Sudan’s oil sector.
South Sudan’s economy is one of the world’s most dependent on oil revenues. They constitute more than 98% of the country’s budget. This sector has however faced scrutiny for allegedly using its revenues to fuel the nearly five-year civil war. Power rivals in the country have been called upon to sign a peace deal which so far has been a success.
South Sudan has Africa’s third-largest oil reserves, at 3.5 billion barrels, and it hopes increasing its production will help the country recover. The deal signed also offers avenues for cooperation in the construction of a pipeline in the south of the country.