When South Sudan seceded from Sudan, it took three-quarters of Sudanese oil production with it, and the two countries have disputed oil revenues and transit fees ever since. Because South Sudan lacks oil infrastructure, it must transport its oil northward through existing pipelines to Sudan’s Port Sudan, on the Red Sea, where there are refineries and loading facilities for tankers.
Seeking other options for oil exports, the landlocked country is now considering building an oil pipeline through Ethiopia and Djibouti, and signed an agreement last month to link its oil fields with a coastal town in Kenya.
“Any sane or even marginally insane investor would need to know first that you could recoup your investment,” said Raymond Gilpin, the director of the Center for Sustainable Economies at the United States Institute of Peace. “Second, you have to secure your investment. And third, regional politics have to be conducive. I do not think South Sudan could answer yes to any one of those three questions at the moment.”