Photographer: Trevor Snapp/Bloomberg
A civil war has cast South Sudan into five years of bloody upheaval. The latest peace deal may hinge on something that’s almost as unpredictable: the oil price.
A new power-sharing bid should fling open the doors of President Salva Kiir’s government and bring former rebels into the cabinet and parliament, with much of the funding for the expanded state coming from revitalized production of sub-Saharan Africa’s third-biggest oil reserves. But pegging peace to a resource that’s recently brought wildly varying revenue is ringing alarm bells.
A deal like this “is workable only for as long as the configuration of power actors remains as it is and the money keeps flowing,” said Alex de Waal, executive director of the World Peace Foundation at Tufts University in Massachusetts. “If there’s any disruption to either, then the agreement will unravel.”
Oil has played a key part in the conflict that’s uprooted 4 million people and may have led to as many as 400,000 deaths since it started in December 2013. After one of the East African nation’s two oil-producing states halted operations early in the war, former Vice President Riek Machar’s rebels targeted facilities in the other in a bid to cut the government’s near-sole source of revenue. Until recently, output has averaged about 130,000 barrels per day, down from 350,000 barrels at South Sudan’s independence in 2011.
Economic Woe
The temporary decline in world oil prices from 2014 added to the woe, spurring an economic crisis and draining the central bank’s foreign reserves. When former ruler Sudan -- which gets crucial income from transporting the fuel to market via its pipelines -- brokered the latest peace deal, it made rehabilitating the shuttered fields a priority.
Disputes between the two nations over crude put them on the brink of war in 2012, with South Sudan stopping all production before restarting the following year.
South Sudanese officials wouldn’t disclose oil revenue figures. Estimates calculated by multiplying annual output cited in a recent BP Plc energy report by the average price for Brent crude shows the total earnings may have been $2.02 billion last year, before oil companies took their shares or transit fees were paid to Sudan.
That’s down from an estimated $5.26 billion in 2014 -- the first full year of the war, but also the first after the shutdown dispute.
How much cash does South Sudan oil generate?
Avg. Brent Price ($) |
Annual Output (bbl) | Estimated Revenue ($ bln) | |
2012 | 94.15 | 31,000 | 1.07 |
2013 | 98.02 | 100,000 | 3.58 |
2014 | 92.93 | 155,000 | 5.26 |
2015 | 48.78 | 148,000 | 2.64 |
2016 | 43.44 | 117,000 | 1.86 |
2017 | 50.85 | 109,000 | 2.02 |
Sources: BP Plc, Bloomberg data
Recent developments could be a boon for the nation’s finances: Brent is just above $80 a barrel and facilities in former Unity state resumed pumping in late August, adding 45,000 barrels to daily output. When the transitional government takes shape in about May, Machar will be reappointed one of Kiir’s five new vice presidents, the cabinet will be expanded to 45 ministers and deputies from 30, and parliament will grow to 550 lawmakers from 400.
‘Fragile Basis’
The revenue may “sustain the expenses of the many people who are part of the respective camps” in the expanded government, said Harry Verhoeven, who teaches at the School of Foreign Service at Georgetown University in Qatar. But he warned the volatility of oil prices means “that any deal depending on the ability to pay off a large number of people is a very fragile basis.”
“In many ways, it would actually work against the establishment of strong institutions which have been the values and principles of arguments on financial arrangements,” he said by phone. “While in the short-term it helps to bring a number of people together and give them money, in the longer run that is unlikely to be a critical basis for peace.”
There are other potential obstacles. The United Nations has warned of lingering distrust between Kiir and Machar’s forces, and a previous power-sharing deal collapsed in July 2016, ushering in some of the war’s worst atrocities.
Pro-Government Rampage
Amnesty International said last month that pro-government forces rampaged through opposition-controlled areas in the north between mid-April and early June, even as peace talks were under way. Some smaller rebel groups aren’t party to the pact.
While fighting has mostly stopped, there remain “some hotspots” of violence in the north, the UN’s under-secretary-general for peacekeeping, Jean-Pierre Lacroix, told reporters on Oct. 9 in the capital, Juba.
Not everyone’s pessimistic. Marial Awou Yol, dean of the school of economics at the University of Juba, said the new revenue means “we will have enough resources to implement and sustain peace.” The transitional administration needs to commit to reforming governmental and economic institutions and nurturing good relations with foreign countries to encourage investment, he said.
Repaying Debts
Some of the cash influx will go toward debts. South Sudanese Petroleum Minister Ezekiel Lul Gatkuoth said in September his country still owes Sudan about $1.2 billion under an agreement to compensate the north for the loss of three-quarters of the formerly united nation’s oil when the south seceded.
Khristopher Carlson, a senior researcher with the Geneva-based Small Arms Survey, said higher oil prices may help calm current tensions, but the use of such funds to “support development and reparation for people affected by years of conflict -- a foundational element for long-term peace in the country -- remains off in the distance.”
“Should oil prices drop, or oil money otherwise not stretch far enough to maintain the sharing of wealth among the elites of South Sudan, then serious challenges may quickly return,” he said.
(Updates with more analyst comment in second paragraph after Fragile Basis subheadline.)
Newer articles:
- South Sudan peace process top of agenda as Uhuru hosts South Africa’s Deputy President - 17/10/2018 08:20
- South Sudan rebels deny holding POWs, political detainees - 17/10/2018 07:43
- South Sudan army raped, killed children - UN - 17/10/2018 07:04
- South Sudan denies killing, maiming children during conflict - 17/10/2018 05:38
- South Sudan seeks to transform agriculture to help beat hunger by 2030 - 17/10/2018 01:28
Older news items
- South Sudan’s 2019 Afcon qualifying chances come crashing down - 16/10/2018 12:34
- Opposition rep urges support for South Sudan peace agreement - 16/10/2018 10:51
- South Sudan's participation in China's expo offers great opportunities: official - 16/10/2018 05:46
- UN, S. Sudan hail Zimbabwe peacekeeping efforts - 15/10/2018 19:56
- South Sudan holds annual trade expo to boast local products - 15/10/2018 16:29
Latest news items (all categories):
- رسالة مفتوحة إلى مدام لميس الحديدى - 01/11/2024 17:50
- Policy actions to strengthen Public Finance Management in South Sudan - 01/11/2024 15:30
- WFP Calls for Cash to Frontload South Sudan Operations Amid Warnings of Rising Hunger - 01/11/2024 15:26
- DTM South Sudan: Biometric Registration and Cash Assistance - Raja Town (October 2024) - 01/11/2024 15:23
- Urgent Call for Government Regulation of Land in the Capital Juba and other areas in South Sudan to Prevent Community Hatred - 01/11/2024 14:52
Random articles (all categories):
- Warring South Sudan rivals sign peace deal - 12/05/2014 04:51
- More than one million severely food insecure in South Sudan - Examiner.com - 06/03/2013 17:56
- Bostian Elementary class raises $1,300 for well in South Sudan - 24/03/2021 21:15
- With No End In Sight, Sudan's Civil War Enters 4th Month - 11/08/2023 03:44
- Public pressure on Kiir to quit yields no fruit - 07/08/2021 00:17
Popular articles:
- Who is the darkest person in the world, according to Guinness World Record? - 25/10/2022 02:34 - Read 53988 times
- No oil in troubled waters - 25/03/2014 15:02 - Read 22154 times
- School exam results in South Sudan show decline - 01/04/2012 17:58 - Read 21270 times
- NDSU student from South Sudan receives scholarship - In-Forum - 29/09/2012 01:44 - Read 18704 times
- Top 10 weakest currency exchange rates in Africa in 2023 - 19/07/2023 00:24 - Read 17330 times