(Agence Ecofin) – Ethiopia plans to finance the construction of a road connecting the oil fields of Paloch, in the Upper Nile region, in South Sudan, to the oil terminal in the town of Malakal, in the west from Ethiopia. An announcement made to Bloomberg by Mayik Ayii Deng, a senior official in the South Sudanese presidency.
In return, Juba will have to build a refinery with a processing capacity of 100,000 barrels per day in the Upper Nile to meet Ethiopian demand. The South Sudanese government has already received funding from a Swiss company and an American company to do this, we learn.
The project is the backbone of several memorandums of cooperation that President Salva Kiir (pictured) is expected to sign during his visit to the Ethiopian capital, Addis Ababa. “We expect to deliver petroleum products to Ethiopia at very reasonable prices,” the official said, adding that refining and exporting the oil to his neighbor will generate additional foreign exchange.
However, recent threats by South Sudanese rebels to boost oil production have worried industry players who are considering a withdrawal from the country. This could undermine the project of the two neighboring countries.
On Tuesday, President Salva Kiir assured that officials of the Ministry of Petroleum are working “tirelessly” to revive production and ensure the safety of people and facilities. In addition, a memorandum of understanding to be signed between the two countries will allow the world’s youngest democracy to benefit from a significant supply of electricity from Ethiopia.
South Sudan, which produces 130,000 barrels of oil per day, is expected to see its output climb to 290,000 barrels daily in July 2018.