When South Sudan became independent from Sudan in 2011 after four decades of civil war, it took 75% of the oil reserves of Sudan. Sudan retained the Chinese-built pipeline infrastructure, refineries and export terminal at Port Sudan on the Red Sea. With this said, an amazing implication of East Africa‘s energy BOOM is that South Sudan will no longer have to rely on Sudan for oil, which accounts for over 90% of government revenue. China’s role in East Africa will too change.
So what does this region need to achieve in order to exploit the abundant resource? The answer lies in construction and developing the regions infrastructure. Pipelines, railways, roads and refineries to get the oil and gas to its ports need to be built. From these ports the oil will be shipped to the energy-hungry Asian countries on the other side of the world.
Kenya and Rwanda’s presidents agreed to go ahead with building two pipelines where one will extend to Uganda and Rwanda an existing Kenyan pipeline from Mombassa. The other pipeline will extend from the Kenyan port of Lamu to South Sudan, with a spur to Ethiopia. Details concerning these two pipelines such as timing or price have yet to be disclosed.
The construction of these two pipelines has the potential to change not just the logistics of oil distribution, but also the region’s geopolitics. You see presently, Chinese state-owned companies who are responsible for and who operate Sudan’s oil-export infrastructure, takes two-thirds of the oil collectively produced by Sudan and South Sudan. Malaysia, Japan and India buy the oil that is left.
Although Kenya is responsible for building the pipeline from Lamu to South Sudan, Toyota Tsusho which is a division of Japan’s Toyota Corp will allegedly do the construction of the estimated $4 billion project.
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