South Sudan warns of economic collapse due to disruptions in oil pipelines

 February 28, 2024 (JUBA) – South Sudan’s government warned that the country’s economy could collapse without immediate intervention to address issues with its oil pipelines. These issues include repairs in areas controlled by the Rapid Support Forces (RSF) and the Sudan Armed Forces (SAF).

South Sudan’s Minister of Information, Michael Makuei Lueth, along with the Minister of Cabinet Affairs, Martin Elia Lomuro, and the Governor of the Central Bank, James Alic Garang, held a press conference in Juba on Tuesday to discuss the country’s political, economic, and security situation.

Minister Lueth revealed that the pipelines transporting South Sudan’s crude oil to the international market face difficulties due to the ongoing war in Sudan. This war has hindered efforts to maintain and repair pipelines affected by the conflict.

“Without immediate intervention, this situation could spell the end for the South Sudanese government,” Lueth stated. “Oil revenue is our primary source of income, and non-oil revenue is insufficient, barely covering a third of salaries, let alone other national expenses.”

He further explained that the decline in oil production resulted from a combination of factors, including the initial impact of the war and subsequent floods that damaged wells, contributing to ongoing low production.

Lueth elaborated on the direct impact of the conflict in Sudan: “The conflict directly affects us, as our oil relies on pipelines passing through Sudan to reach the Port Sudan Red Sea port for international market access. The current situation, including the Red Sea blockade, is a complex global issue. Our government refrains from discussing specific blockades related to the conflicts involving the Houthis and counter-offensives by the Americans and their allies.”

He added: “Actions by the Houthis in the Red Sea, coupled with the Israeli-Palestinian conflict involving Hamas, have led to a blockade. These actions prompted intervention from the Americans and their allies, resulting in a further blockade and conflict in the region.”

However, Minister Lueth urged journalists to respect the government’s decision not to delve deeper into current global affairs as contributing factors to South Sudan’s economic challenges.

“We don’t want to elaborate on the Red Sea or events in Palestine. We assume you are already informed about these matters,” he stated.

Lueth emphasized the challenge posed by the divided control of areas through which South Sudan’s oil pipelines pass. He stressed the need for caution when handling situations in areas controlled by either the RSF or the SAF to avoid jeopardizing access to the pipelines for repairs.

“We must strive for a delicate balance to ensure our oil operations continue,” he explained. “Our freedom is contingent upon finding an alternative oil evacuation route. As long as our oil solely relies on passing through Sudan, we remain vulnerable to regional conflicts.”

He concluded by highlighting strategic plans involving Ethiopia as a potential alternative route for oil evacuation. Additionally, South Sudan is considering establishing refineries to export refined petroleum products, aiming to diversify its economy and reduce dependence on the current oil pipeline infrastructure.

(ST)