Black Gold, Broken Pipelines: Unpacking Sudan’s Governance Crisis and the Oil Flow Conundrum

Dr Alwaleed Adam Madibo
The process of repairing and resuming work on oil pipelines between Sudan and South Sudan indicates more than just an economic opportunity; It embodies the complex interplay of regional dependencies, internal conflicts, and international interests. As the political scientist Elizabeth A. Nugent points out, “In a region full of resources, the stakes are high, and the future of both countries will be determined by the interplay of local and global forces. ” This ongoing situation requires careful coordination to ensure stability and prosperity in both countries.
Incorporating comparative statistical figures will provide a clearer picture of the economic and geopolitical landscape surrounding the state of oil pipelines between Sudan and South Sudan. In 2022, South Sudan produced around 127,000 barrels per day, reflecting a recovery from previous declines due to civil conflict. Despite these numbers, the International Monetary Fund estimates South Sudan’s economic growth to be around 3.5% in 2023, which is a sign of an ongoing struggle for stability.
South Sudan’s economy is deeply tied to its oil exports, which account for around 90% of its GDP. As the international relations scholar Michael W. points out, M. Magliveras, “For landlocked countries like South Sudan, access to export routes is not just a matter of logistics; This highlights the sensitive nature of South Sudan’s dependence on oil revenues, especially in light of the ongoing internal conflict. Although the consequences for global oil markets are important. Energy economist Paul Stevens notes, “South Sudan oil, being light and sweet, is in particular demand on the global market. Increasing its exports could affect global supply chains and prices.” This reinforces the importance of stability in South Sudan to international energy dynamics.
The possibility of attracting renewed international investment depends on governance issues of transparency and accountability. In 2022, foreign direct investment in South Sudan was less than $100 million, a stark contrast to neighboring Ethiopia, which attracted more than $4 billion in the same year. This discrepancy highlights the challenges South Sudan faces in creating a favorable investment climate. The Jok Madut Jok Academy said, “International engagement with South Sudan will depend not only on economic factors but also on the country’s ability to demonstrate commitment to governance and stability.” This highlights the multifaceted challenges faced by the Sudanese government in attracting foreign investment.
For Sudan, processing and shipping fees for oil from South Sudan are a large proportion of its GDP. In 2022, these fees were about $1.5 billion, which represents about 15% of Sudan’s total revenue. The loss of oil revenue after 2011 (from about $5 billion a year to about $1 billion in 2022) meant that Sudan was highly dependent on these fees for economic survival. Production was close to ceasing during the conflict period (2013-2016), the civil war that broke out in South Sudan. Work on the pipeline did not resume until 2017 and continued until 2023. The period (2017-2023) is considered to be a period of recovery and stability.
The ongoing conflict between the Sudanese army and the Rapid Support Forces that erupted on April 15, 2023 has disrupted the production and safety of complex pipelines. Concerns about stability increased as the Rapid Support Forces took control of critical infrastructure. In recent months, Sudan has seen a 5% increase in conflict-related displacement, putting the integrity of the oil supply chain at risk. The ability to recover oil reserves depends on resolving the current conflict and rebuilding critical infrastructure, as global oil markets are sensitive and affected by geopolitical instability. Let us not forget that disrupting production and exports will increase insurance and operating costs, putting more pressure on profit margins for Sudan and South Sudan.
The geopolitical environment in the Horn of Africa is shaped by these developments. As East Africa analyst David Shinn emphasizes, “The resumption of oil exports from South Sudan could change the competitive landscape of oil production in the region, particularly affecting neighboring countries trying to develop their own resources.” The resumption of oil exports from South Sudan may affect the competitiveness of regional oil markets. For example, Uganda, with estimated reserves of 6.5 billion barrels, has plans to develop its oil sector. In comparison, South Sudan has estimated reserves of 3.5 billion barrels but faces production capacity challenges due to ongoing instability.
As of mid-2023, global oil prices average around $80 per barrel. Light, sweet crude oil from South Sudan, which normally sells at a premium, can change price dynamics. For example, if South Sudan increased its exports by 50,000 barrels per day, it could generate additional revenue of up to $1.5 billion annually based on current market prices. This shows that the re-entry of South Sudan into the oil market could change the dynamics of investment in the region. “The control of economic resources such as oil pipelines is often at the heart of power struggles in Sudan,” said academic and conflict expert Hamza Alić “The RSF’s control of parts of the pipeline raises questions about the continuity of operations.” Such internal conflicts affect not only the flow of oil but also regional stability.
In conclusion, the process of repairing and resuming operations in the oil pipelines between Sudan and South Sudan represents a decisive turning point in the economies of both countries. With South Sudan dependent on oil for 90% of its GDP and Sudan dependent on processing fees for around 15% of its revenue, their fates are deeply intertwined. The potential for increased oil exports and the associated economic benefits underscore the urgent need for stability and effective governance in both countries. As economist Michael Spencer says, “In resource-rich areas, the interaction between local governance and economic opportunity often determines the broader path of development.” This ongoing situation requires careful coordination to ensure stability and prosperity.

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