Reply To:
Name - Reply Comment
Caution urged for Sri Lanka’s South Sudan crude deal
Expert warns Sri Lanka’s pursuit of South Sudanese crude faces insurmountable challenges from sanctions to incompatible refineries
Colombo, July 15 (Daily Mirror) - Sri Lanka’s interest in diversifying its oil supply portfolio by exploring crude imports from South Sudan may pose serious political, logistical, and technical challenges, Sri Lanka’s former Ambassador to South Sudan, Kana Kananathan warned.
Ambassador Kananathan urged Sri Lankan energy authorities to reconsider such a move, citing sanctions, unreliable supply chains, and refinery incompatibility.
“While diversification is essential for energy security, importing South Sudanese crude at this stage is neither practical nor economically viable,” he stated.
Since 2018, the United States has imposed sanctions on at least 15 South Sudanese oil-related entities, including the state-owned oil firm Nilepet.
These restrictions are aimed at preventing oil revenues from fueling ongoing internal conflict.
Any country or company seeking to trade South Sudanese crude is required to obtain a US export license, making transactions in US dollars complicated and subject to stringent compliance requirements. Ambassador Kananathan emphasized that such legal risks have deterred major global oil traders from engaging with South Sudan, unless significant discounts are provided to offset the liability.
South Sudan is a landlocked country, and all crude exports rely on a single pipeline that runs through Sudan to Port Sudan.
However, recurring pipeline disruptions, civil unrest, and the ongoing Red Sea conflict involving Houthi rebels have rendered supply routes highly unstable.
Multiple instances of force majeure declarations in recent months have further shaken market confidence.
“This level of unpredictability is especially concerning for Sri Lanka,” Kananathan noted, saying “given that our national reserves are limited and our refinery operations demand a steady and secure inflow of crude.”
Even if supply were secured, shipping through Port Sudan would require navigating militarized zones and underdeveloped infrastructure -factors that inflate shipping costs and delay deliveries.
South Sudan primarily exports two crude blends: Nile Blend (semi-sweet) and Dar Blend (heavy, acidic).
Of the two, Dar Blend is particularly problematic, with a high Total Acid Number (TAN of 2.1–2.4), which poses serious risks of corrosion to refinery infrastructure not designed to handle such grades.
Sri Lanka’s Sapugaskanda Refinery, with a capacity of 50,000 barrels per day, is calibrated to process light to medium sweet crudes.
To accommodate South Sudan's heavier crude oil blends, substantial investments would be necessary across several key areas.
This would include the procurement and installation of corrosion-resistant materials throughout the infrastructure, specialized blending and desulfurization equipment to process the crude, and advanced heating and processing systems to handle the specific properties of these heavier blends.
“These technical upgrades would likely eliminate any price advantage gained from discounted crude,” Kananathan added.
With Sri Lanka’s foreign exchange reserves under pressure and global oil prices remaining volatile, importing discounted but difficult-to-refine crude offers minimal economic return.
Instead, Ambassador Kananathan advised pursuing imports from stable, non-sanctioned suppliers like Nigeria’s Bonny Light or Arab Light blends, which are both technically compatible and commercially safer.
South Sudanese crude oil is not viable for Sri Lanka for several compelling reasons. Active US sanctions and export restrictions directly impede its acquisition, while unstable supply chains and frequent pipeline disruptions make reliable delivery highly uncertain. Additionally, the crude's incompatibility with Sri Lanka's current refinery infrastructure would necessitate prohibitively high investment costs for both compliance and necessary upgrades.
Ambassador Kananathan suggested a strategic recommendation that
Sri Lanka should focus on sourcing crude from reliable, politically stable markets while continuing to invest in modernizing domestic refining capacity -particularly through projects like the proposed Hambantota refinery.
“Our energy future must be built on security, not uncertainty,” he said.
Comments - 13
Recommended
You May Also Like
Trending
