JUBA, South Sudan | South Sudan, which has known little but misery and division in its brief life as a sovereign state, is hoping that its oil wealth will underwrite a fragile peace in this devastated country following its brutal civil war.
As South Sudan moves to woo foreign investors to revamp its vital energy infrastructure and spark economic growth, officials such as South Sudanese Petroleum Minister Ezekiel Lol Gatkuoth are betting on a much-anticipated two-day oil conference that kicks off Wednesday in Juba.
At stake may be the country’s ability to deliver the growth to bolster the fragile peace deal signed in September.
“South Sudan is dedicated to expanding oil and gas operations to strengthen the economy as well as pursue economic diversification through new infrastructure and power projects,” Mr. Gatkuoth said.
South Sudan, the world’s youngest country following its break from Sudan in 2011, descended into civil war five years ago due to fierce rivalry between President Salva Kiir and his former vice president, Riek Machar. The civil war, complicated and intensified by tribal loyalties, resulted in almost 383,000 deaths, displaced 4 million people and left the economy in ruins, leaving 6 million citizens facing the threat of famine, according to the State Department and the United Nations.
Now with a peace deal firmly in place, analysts say it is imperative for the economy to get moving. They are optimistic that oil could cement the country’s peace and finally put it on a positive path.
“There is every reason to believe that production will go up and oil prices will follow suit in the market,” said James Alic Garang, an economist at the Upper Nile University in Juba. “This has positive effects on the budget and the provision of other critical services and development spending in the country.”
Although it has one of the largest proven reserves of oil in sub-Saharan Africa, South Sudan does not rank among the world’s largest producers, overshadowed by such suppliers as Saudi Arabia, Libya and Iraq, But according to the World Bank, South Sudan ranks as the most oil-dependent nation in the world, with oil accounting for almost all of its exports and around 60 percent of its GDP.
Juba is on track to upgrade its oil production to between 180,000 and 200,000 barrels per day from oil fields that should reopen by the end of the year as fighting subsides, Mr. Garang added.
Recently, in a moment of relative political stability, South Sudan extended oil exploration and production agreements with foreign oil companies that include Malaysia’s Petronas, China National Petroleum Corporation and India’s Oil and Natural Gas Corporation to drill in the Unity oil fields in the north of the country through the middle of the next decade. The oil arm of Russian energy giant Gazprom announced this week that it has inked a memorandum of understanding with South Sudan to explore four parcels of land for potential oil deposits, the Reuters news service reported Tuesday.
“It is imperative that new international service companies and providers enter the market to meet the demand for services,” Mr. Gatkuoth said.
University of Juba economist Marial Awou Yol said South Sudan must diversify its economy, boosting its agriculture, fisheries, forestry and livestock industries to feed its people, expand its domestic economy and put former soldiers to work. The country is the only one in the region that imports food. Yet the East African republic has almost 45 million cows, goats and sheep but lacks an infrastructure to market them, he said.
“We have plenty of resources to expand the economy of this country. Agriculture is one of them. The whole Upper Nile region is an agricultural land,” Mr. Yol said. “If we produce more food for our people, than they will need less hard currency, while the government can channel the reserves for other needs.”
But oil revenues remain essential to jump-start that commercial activity, he added. “What we need is just a commitment from the government and investors,” said Mr. Yol. “We need investment.”
Meanwhile, to deepen the peace, the warring parties also need to implement all the clauses in the peace agreement, Mr. Yol said. Mr. Machar is supposed to become President Kiir’s deputy again, rebel soldiers are supposed to be integrated into the army, and economic reforms that address rebel concerns about sharing the country’s wealth are under discussion.
But the problems and distrust from the civil war will not disappear quickly, analysts say.
Progress on the peace accord measures has been slow, said Mr. Yol. And, despite the deal, the warring factions have on several occasions accused each other of truce violations in the southwestern border town of Yei.
“These attacks have been premeditated and planned by the enemies of peace to continue prolonging the suffering of the people of South Sudan,” said rebel spokesman Lam Paul Gabriel.
A U.N. report also recently found that numerous violations of an arms embargo against the country had been occurring in recent months. That report also warned of extreme sexual violence, human rights abuses and other security challenges.
Even so, for residents of Juba and other towns, there is finally grounds for optimism at the end of five long years of hardship and violence.
“It is possible for the economy of this country to recover if there is no more fighting,” said David Kwaje, a Juba resident, who noted that the country was vulnerable to oil prices. “For the economy to gain its strength, it also depends on the fixed oil prices from the world market.”