Sudan was once the largest country in Africa before it was split into two countries in 2011, geographically redefining the state as Sudan (or North Sudan) and South Sudan. The geographical region where both countries lie has rich oil reserves. However, it is also a region hurting from the inside due to years of wars and internal conflicts. With both countries being dependent on oil production to support their economic stability and growth, the future development of countries lies in it’s oil industry performance.
With conflicts, economic struggles, and the COVID-19 pandemic affecting the Sudan region, are there signs of the Sudan oil industry recovering? Read on as we explore some promising signs.
Sudan and South Sudan Peace Deal
While the bloody internal conflict in Sudan led to the independence of its southern region and the establishment of South Sudan, the conflicts along the borders have continued. The conflicts resulted in severe damage to oil production facilities. Both countries have realized the value of oil as their primary resource and have agreed to enter a peace deal and cooperative agreement in repairing, resuming, and ramping up oil production operations. This agreement is also a beneficial move as Lundin Sudan, Petronas, OMV, ONGC, CNPC, and Sudanese NPC Sudapet can resume joint oil exploration and ventures and further improve oil production. Investors feel safer and more secure when armed elements from both countries agree to a ceasefire and end disruptions of their operations. The current oil pipeline arrangement between Sudan and South Sudan is working well, with the two countries having interconnected oil pipelines and facilities and have set fees and tariffs in their agreement.
Lifting of Sanctions by the U.S.
Another promising sign for Sudan’s oil industry recovery is the lifting of the economic sanctions placed by the United States due to the alleged involvement of Sudan with the Al-Qaeda terrorist group. This remarkable achievement will help ease up the constraints of both countries as this means that they can pursue international partnerships with more countries. For a long time, China has been the primary investment partner of Sudan. While prospective foreign investors are elated with this development, they are still observing the political and security situation in the country, and they may take time to decide on pursuing investments in Sudan at the moment. Nevertheless, the Chinese and other foreign oil operated companies that already have partnerships with Sudan will gain more confidence in strengthening and expanding their investments.
COVID-19 Recovery Plans
The COVID-19 has severely limited the economic activities of many countries across the globe and Sudan is no exception. Nevertheless, both Sudan and South Sudan are extending efforts to contain the spread of COVID-19 in their country and lessen the cases of infection to resume regular economic activities. While oil production has been partially affected, both countries are making sure that the oil they produce at the moment doesn’t become too low and not become a counterproductive effort. Maintaining stable oil production is key for both countries as they work with international health agencies to recover quickly from the pandemic and resume their plans in improving their oil investments and production and getting their economies on the right track.
Amidst the military conflicts and political turmoil affecting Sudan and South Sudan, oil and petroleum products will remain as their primary economic driving force for many years. Recent developments in both countries are showing signs of oil industry recovery. We hope that the government leaders in both countries continue to pursue constructive economic solutions for their respective countries and look after people. All that said, Sudan as a region shows a picture of political change and economic promise.
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