South Sudan's Oil Sector: A High-Risk, Low-Return Gamble

The recent bombings in South Sudan’s Unity State, which killed at least seven and injured 20, underscore the fragility of the world’s youngest nation. For investors, this violence is not an isolated incident but a symptom of systemic instability threatening the country’s oil-dependent economy—a sector once seen as a lifeline but now a minefield of geopolitical and operational risks.

A Fragile Political Landscape

South Sudan’s political crisis has reached a boiling point. Delayed elections until 2026 have deepened distrust between President Salva Kiir and Vice President Riek Machar, whose factions remain armed and hostile. Cross-border tensions with Sudan’s civil war have further destabilized the region, with clashes over the oil-rich Heglig fields escalating in 2025. The Sudanese Armed Forces (SAF) and Rapid Support Forces (RSF) have drawn South Sudan into their proxy battles, while Ugandan military support for Kiir’s government fuels regional arms races.

The

illustrates the stakes: pipelines critical to oil exports lie in contested zones, exposed to sabotage and war.

The Oil Sector’s Existential Crisis

South Sudan’s economy relies on oil for 90% of its revenue, but output remains crippled. After a near-year-long shutdown due to Sudan’s civil war, production limped back to 90,000 barrels per day (bpd) in early 2025—half its pre-crisis capacity. A ruptured pipeline in Sudan’s conflict zone, operated by the Dar Petroleum Operating Company (DPOC), has yet to be repaired. China (41%) and Malaysia (40%) control DPOC, but their investments face existential risks.

The reveals investor wariness: CNPC’s shares fell 12% in 2024 amid sanctions probes over its ties to South Sudan’s corruption, while Petronas saw similar declines due to geopolitical concerns.

Humanitarian Collapse Undermines Stability

The bombings and broader violence have exacerbated South Sudan’s humanitarian disaster. With 7.1 million people—60% of the population—facing acute hunger, the government’s priority remains patronage networks, not public services. Currency devaluation (down 50% since 2020) and inflation (17% annually) have made basic goods unaffordable. Médecins Sans Frontières (MSF) reports attacks on aid workers surged in 2025, with 20 injured in recent bombings alone.

Why Investors Should Stay Away

The math is grim:
- Oil Dependency: Even if production reaches 110,000 bpd, it’s insufficient to stabilize a debt-ridden economy (debt-to-GDP ratio: 34.5%).
- Geopolitical Risks: Sudan’s war has turned pipelines into battlegrounds, with 60% of South Sudan’s exports halted due to pipeline damage.
- Corruption: Over $1 billion in oil revenues were looted between 2018–2022, leaving civil servants unpaid. Transparency International ranks South Sudan as the world’s most corrupt nation.

Conclusion: A Losing Proposition

South Sudan’s oil sector offers no upside for investors. While geopolitical tensions and pipeline disruptions dominate headlines, the deeper issue is systemic: a government incapable of governance, a military prioritizing factional survival over stability, and an economy held hostage by Sudan’s civil war.

Data paints a bleak picture:
- Oil production remains at half its pre-crisis capacity.
- Over 7 million face starvation, diverting resources from infrastructure repair.
- Foreign investors—be they in oil or agriculture—are deterred by corruption and conflict.

For now, South Sudan’s oil fields are a warning: invest here, and you’re betting on a war zone.

The currency’s collapse—from SSP 157 per USD in 2020 to SSP 314 in early 2025—reflects investors’ flight. Until Sudan’s war ends, pipelines are secured, and governance improves, South Sudan’s economy remains a cautionary tale.