Petronas leaves South Sudan after nearly 30 years of oil exploitation, accusing the government of blocking the sale of its assets. The departure of the Malaysian oil company, in a context of environmental crisis and economic decline, raises questions about the future of the black gold industry in the world’s youngest country.
The only source of income for the South Sudanese state, the oil industry is in the midst of a crisis. Production has fallen from 300,000 barrels a day at independence in 2011 to less than 50,000 barrels in 2024, largely due to the war in Sudan.
For Boutros Manani Magaya, president of the subcommittee on petroleum of the National Assembly, the departure of Petronas is a hard blow: “ Why hasn’t there been further investment in this sector to increase production or keep it at the same level? ? This really raises questions. We know that South Sudan has large oil reserves. Why didn’t Petronas and other companies continue to invest in the sector? ? »
Pollution reported
The reasons could be found in the upcoming financial and environmental audits, which could explain this hasty departure.
Accusations of pollution linked to the oil industry continue to grow. Gizam Moses, representative of the Civil Society Coalition for Natural Resources (CSCNR), evokes serious consequences for local populations: ” We have received numerous reports of children born with severe deformities due to pregnant women’s exposure to oil pollution. These stories are clear indications that our laws regulating the exploitation of natural resources are not respected by companies operating in our country. »
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Companies called to account
For Joseph Africano Bartel, undersecretary of the Ministry of the Environment, responsible companies will not be able to escape their obligations, even after their departure: “ Anyone who came to this country before independence, taking advantage of the lack of laws and controls thinking they would make money while neglecting the environment, should think twice. Because they won’t disappear. Petronas or any other company operating in South Sudan and not protecting the environment will be held responsible. »
Bartel cites as an example the $12 billion that the Anglo-Dutch oil company Shell had to pay to victims of oil pollution in the Niger Delta.
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What are the main challenges that foreign investors face in South Sudan’s oil sector?
Interview Between Time.news Editor and Petroleum Expert on Petronas’ Departure from South Sudan
Editor: Welcome to Time.news, where we explore the most pressing issues of our time. Today, we have the pleasure of speaking with Dr. Lila Akintola, a leading expert in petroleum economics and environmental policy. Dr. Akintola, thank you for joining us.
Dr. Akintola: Thank you for having me. It’s a pleasure to be here.
Editor: Let’s dive right in. Petronas has exited South Sudan after nearly 30 years of operations, citing government hurdles in asset sales. What does this departure signal for the future of the oil industry in South Sudan?
Dr. Akintola: Petronas’ withdrawal is a significant indicator of instability in South Sudan’s oil sector. Given that this industry has been the backbone of the nation’s economy—providing the only substantial source of revenue—it raises alarm bells. The fact that a major player like Petronas is leaving suggests deeper issues pertaining to investment security and government cooperation.
Editor: Exactly. You mentioned investment security. The South Sudanese government has faced criticism for its handling of the oil sector. Boutros Manani Magaya, the president of the subcommittee on petroleum, questioned the lack of further investments. What do you think are the underlying factors contributing to this lack of investment?
Dr. Akintola: There are a myriad of factors at play. First, the ongoing conflict and instability within the region naturally deter foreign investors. South Sudan has seen production plummet from 300,000 barrels per day at its independence in 2011 to under 50,000 today. Such a drastic reduction signals to potential investors that the operational environment is fraught with risk. Furthermore, the impending financial and environmental audits could be creating a climate of uncertainty that not only impacts Petronas but may dissuade other companies from entering or remaining in the market.
Editor: That’s a concerning perspective. With regards to environmental issues, how does the potential for these audits tie into the corporate decision-making process, particularly for companies like Petronas?
Dr. Akintola: Environmental concerns have become increasingly pivotal in the decision-making processes of oil companies globally. As stakeholders, including governments and local communities, grow more aware and concerned about the impact of oil extraction on their environments, companies must be responsive. If audits are anticipated—especially those that could expose pollution or regulatory non-compliance—companies may choose to exit rather than risk reputational damage and hefty fines. It places them in a precarious position and often leads to a preemptive withdrawal, as we’ve seen with Petronas.
Editor: In light of Petronas’ departure, what does the future hold for South Sudan’s oil sector? Are there alternative paths for economic recovery?
Dr. Akintola: The future looks uncertain, and recovery will likely require a multifaceted approach. South Sudan needs to engage in dialogues that build trust with foreign investors and ensure that the operating environment is secure and profitable. Additionally, diversifying the economy beyond oil could alleviate some pressure. Investing in agriculture, tourism, and other sectors might help to reduce reliance on oil revenues and create a more resilient economic framework. The country possesses substantial natural resources; it just needs the right strategies to leverage them sustainably.
Editor: It certainly sounds daunting but essential for long-term stability. Before we wrap up, what would be your final takeaway for our readers regarding the current situation in South Sudan’s oil industry?
Dr. Akintola: My main takeaway would be that while the withdrawal of Petronas is indeed a setback, it also serves as a crucial turning point. It highlights the pressing need for policy reform, investment in infrastructure, and robust environmental governance. Moving forward, South Sudan has a unique opportunity to rethink its approach to natural resources and strive toward a more balanced and sustainable economic future.
Editor: Thank you, Dr. Akintola, for your insights. It’s clear that while South Sudan is facing challenges, the path forward requires innovative thinking and committed action. We appreciate your time today and look forward to seeing how the situation unfolds.
Dr. Akintola: Thank you for having me. It’s been a pleasure to discuss these important issues with you.