By Deng Machol
Juba – South Sudan says South Africa will invest $1 billion in the world youngest country’s oil sector in what would be the largest investment in the East African country’s history.
Petroleum Minister Ezekiel Lul confirmed Friday’s signing of the memorandum of understanding (MOU) with South Africa’s energy minister, Jeff Radebe.
However, Radebe told state broadcaster SABC that both countries would benefit from the MOU.
South Sudan has Africa’s third-largest oil reserves, at 3.5 billion barrels, and it hopes increasing production will help the country recover in the wake of the signing of a peace deal two months ago, between President Kiir and rebel leader Machar.
One analyst warned that despite the signing, there was no guarantee the South African money would come through, though it would be “incredible” if it did.
Now, South Africa would join Chinese, Indian, Malaysian and other oil and gas investors’ interests in South Sudan’s oil sector.
Juba government said the South African money would be used for the refining and processing of oil and gas, research and development, and the transfer of technology.
Radebe further said South Sudan had plans to build a refinery with “a capacity of 60,000 barrels of oil per day.”
South Africa, South Sudan’s new deal came shortly after South Sudan’s second Africa Oil & Power Conference, the country’s first major attempt to attract investors since the government and armed opposition signed the fragile peace deal in September. The previous agreements have ended in fresh gunfire.
“This is an enormous show of confidence in South Sudan’s potential,” said Guillaume Doane, CEO of Africa Oil & Power, which organized the conference. “South Sudan needs investment capital and infrastructure. Working with South Africa on this level will give it both,” he added.
On paper the deal looks implausible, according to the country observers and analysts, it’s just an MOU, and agreements like this, the implementation will be very long.
More so, South Sudan’s economy is one of the global’s most dependent on oil revenues. Its oil sector has faced inspection for allegedly using the oil cash to fuel the five-year civil war, but with the Khartoum and Kampala backing peace deal, the country is moving to revive its oil revenues to strength a country’s economy and infrastructure development.