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From South Africa and South Sudan Advance Oil Refinery and Exploration Project

How could the South Africa-South Sudan oil project affect the National Treasury?

Possible What happens if… A possibility worth considering, not a forecast.

The refinery project's financial risks could strain the National Treasury's oversight. The oil cooperation project, which involves building a 60,000 barrels-per-day refinery in Pagak, South Sudan, is funded by the approved budget of South Africa’s Strategic Fuel Fund (SFF). The SFF currently holds 90% of the project in B2 Block. Because the SFF manages a major national strategic asset, the financial risks—such as high operational costs, security issues, and the inherent exploration risk—are subject to the national financial framework overseen by the National Treasury. The project has already spent nearly $20m (R330m) and its future financial viability depends on successful exploration activities.

Reported by 1 independent outlet Written Saturday
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The facts so far

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  • South Africa’s Strategic Fuel Fund (SFF) holds 90% of the project in B2 Block.timeslive.co.za
  • The refinery is planned for Pagak in northeastern South Sudan and is rated for 60,000 barrels-per-day.timeslive.co.za
  • The project is solely funded by the approved budget of the SFF and nearly $20m (R330m) has already been spent.timeslive.co.za
  • SANPC is conducting a terrain reconnaissance study in the Jonglei Sub-Basin to derisk a 2D seismic survey.timeslive.co.za

Why it matters

The project represents a massive strategic investment for South Africa, as oil revenues fund more than 80%-90% of the national budget, making the economy heavily dependent on hydrocarbon performance. The financial health of the SFF, which is tied to the national budget, is therefore critical to the country's economic stability.

This venture is complicated by the severe structural and logistical challenges in South Sudan, including limited infrastructure, seasonal flooding, and insecurity. The success of this deal, which was struck over seven years ago, hinges on overcoming these risks and achieving successful exploration activities.

What we don't know yet

  • What specific financial safeguards are in place to mitigate the high operational costs and exploration risks?
  • How will the government manage the financial implications if the exploration phase does not lead to production?

What would change this answer

The SANPC successfully completes the terrain reconnaissance and seismic survey in Jonglei Sub-Basin.This would increase the likelihood of moving into the appraisal phase, potentially solidifying the long-term financial commitment and risk profile for the National Treasury.
Political instability or active fighting in South Sudan worsens.This would increase the risk of project delays or halts, potentially leading to the loss of the $20m already spent and increasing the financial burden on the SFF.

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The full eventSouth Africa and South Sudan Advance Oil Refinery and Exploration Project Everything aboutNational Treasury

Brind's analysis is written by AI from the reporting linked above and can be wrong. This explainer is a possibility worth considering, not a forecast: steps marked as Brind's reasoning are not stated in the reporting. It is not investment advice; do your own research.