Page 16 - NILE EXPLORER

about half of the country’s GDP, and expressed interest, ,” Chuang had said Moreover, an important policy question
most of the country’s exports (about then. is whether government actions can
97%) and government’s revenue (about induce increased investment in the long
98 %) in the period 2018-2019. “The area we are exploring can only be term, as research on the pattern of oil
Given the current dominance of oil, and 10 or 11 percent, but the rest 89 or 90 is exploration across developing countries
unexplored that means we still need a
the relative underdevelopment of non- suggests that oil exploration activities are
oil sectors; the functioning of the oil lot of work to be done, and that’s why we not solely determined by geology, factors
sector represents a key priority for the are planning to have the licensing round related to institutional quality and the
new government. Furthermore, since to make sure more oil is explored,” he associated governance environment
production and consequently revenues said. are of importance. Expert observes
are forecasted to cease by the 2030s, Further, the official said the timely that levels of exploration, drilling and
the future trajectory of the oil sector formation of the new government would investment in the sector are a function
represents a critical challenge in the help spur the appetite of international of both geology and institutional quality.
development of this new nation.
oil investors and services companies to Industry and infrastructure in
Certainly, the bidding would represent enter the country’s oil and gas sector. landlocked South Sudan are severely
an incredibly opportunity for investors According to the World Bank, South underdeveloped; the country has about
in a vast under explored oil region (it Sudan is the most oil-dependent nation 10,000 kilometers of roads, just 2% of
is estimated that at least 70% of South in the world, with oil accounting for them paved. Electricity is produced
Sudanese oil is still to be found. mostly by costly diesel generators,
almost all of its exports and around 60 and indoor plumbing and potable
At independence in 2011, oil production percent of its gross domestic product. water are scarce, so less than 2% of the
was at 360 thousand barrels per day, However, a new research on oil population has access to electricity. It is
which then stabilized at 350 thousands exploration in developing countries, sustained investments in these sectors
per day (2012-2013), resulting in high observe that favorable geology may the will unlock consumption and create
export earnings, high government not alone be enough for South Sudan employment.
revenues and an income per capita level to induce additional oil exploration,
of a lower middle-income country. About 90% of
consumer goods,
Since the start of the civil war in 2013, the capital, and services
conflict adversely affected the security are imported from
and stability of the country, leading to a neighboring countries
dramatic decline in oil production. The – mainly Uganda,
country’s production of oil had shrunk Kenya and Sudan.
to around 130,000 BPD by the time of Chinese investment
the peace agreement in February. This plays a growing role
has since increased to 175,000 barrels a in the infrastructure
day (bpd), due in part to South Sudan’s and energy sectors.
newly formed unity government, which
has promised to silence the guns. Long-term challenges
include rooting out
The offering is certainly necessary, President Salva Kiir chairs a cabinet meeting public sector corruption,
particularly, given that the country’s oil improving agricultural
output is expected to fall below 100,000 investments and production. The productivity, alleviating poverty and
bpd by 2021 if new investments into the institutions and policies put in place by unemployment, improving fiscal
sector don’t materialize. the government are more likely to make transparency - particularly in regard to
According to World Bank, South Sudan a difference for the exploration activities oil revenues, taming inflation, improving
is the most oil dependant nation in the and therefore also the likelihood of government revenues, and creating a
world, with oil accounting for almost discovering new oil reserves, than the rules-based business environment.
all its exports and around 60 percent of promotion. The economy of South Sudan consists
GDP. Income from oil accounts for 98 Furthermore, the institutions and predominantly of small scale agriculture
percent of the country’s budget. Since policies put in place are also likely to and oil extraction. GDP per capita for
August 2019, South Sudan has made a matter for the recovery rates of proven 2011 was estimated at 1,822 USD, more
discovery in the Adar oil fields in Block reserves. The new government must than double the level of neighboring
3, containing more than 37 million of focus on the role of governance and Kenya and almost five times the level of
discoverable oil. institutions in shaping investment neighboring Ethiopia, a clear indication
incentives in the oil sector. Accordingly, that the country has potential for growth.
“This licensing round will not just beyond promoting the sector for South Sudanese, then, were relatively
be given, but the companies have to investment, work is required to well of compared to their neighbors, by
compete, and for us, we have to get determine the optimal configuration of economic parity.
the best at the end of the day. There policy actions and institutional design South Sudan continues to under-
are a number of companies that have appropriate. invest in sectors that would have the

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