PetroChina International, a subsidiary of China National Petroleum Corporation (CNPC), is exploring opportunities to develop a regional oil transportation corridor linking South Sudan to Djibouti through Ethiopia. This project aims to provide South Sudan, a landlocked oil-producing country, with an alternative export route while strengthening Djibouti's ambition to become a regional energy hub. The proposed corridor would extend approximately 1,550 kilometres from South Sudan through Ethiopia to Djibouti.
A high-level PetroChina International delegation, led by Deputy General Manager Hu Weiqiang, met with the Chairman of Djibouti Ports and Free Zones Authority at the Red Sea World Centre to discuss the proposal. The talks focused on constructing a petroleum storage depot with a capacity of 300,000 cubic metres at Damerjog Industrial Park, establishing an oil refinery, and developing the cross-border transportation corridor. The Damerjog Liquid Bulk Port would serve as the main maritime gateway for South Sudanese crude to reach international markets.
The proposed corridor's route would cross areas with a maximum elevation of 2,400 metres. Djibouti's existing port facilities and supporting infrastructure, including roads and electricity, along the route make it an attractive option. This initiative could offer South Sudan an alternative to its longstanding dependence on oil export pipelines passing through neighbouring Sudan to Port Sudan. Oil exports are the country's primary source of government revenue, making disruptions to transportation infrastructure a significant economic and fiscal risk.
The conflict in Sudan has repeatedly interrupted oil transportation, forcing shutdowns and affecting South Sudan's fragile economy. Establishing another export route through Ethiopia could reduce this vulnerability and provide greater flexibility in accessing international markets. South Sudan previously identified Djibouti as a potential alternative export destination following its independence in 2011, and the two countries signed a memorandum of understanding for a crude oil pipeline through Ethiopia.
However, implementation has made limited progress. For Djibouti, the discussions complement broader efforts to expand its petroleum storage, processing, and transportation infrastructure. Damerjog Industrial Park has attracted investment in a 375,000-cubic-metre petroleum products storage terminal developed by Dangote Industries. This facility is part of a $660 million Djibouti-Ethiopia pipeline project connecting Damerjog with Dewele in eastern Ethiopia.
The project is expected to significantly reduce fuel transportation time between the two countries. PetroChina International (Middle East), established in 2002, operates across the Middle East, the Red Sea region, and East Africa, trading more than 140 crude oil grades. CNPC already has substantial interests in South Sudan's petroleum industry through its leading role in the Dar Petroleum Operating Company joint venture, which operates oil Blocks 3 and 7.
The development of the proposed oil corridor could have significant economic implications for the region. It may enhance Djibouti's position as a regional energy hub and provide South Sudan with a more stable and diversified export route. The project's feasibility and potential impact will likely be closely watched by industry stakeholders and regional governments.
Key points
- PetroChina International is exploring a regional oil transportation corridor from South Sudan through Ethiopia to Djibouti.
- The proposed corridor aims to provide South Sudan with an alternative export route and strengthen Djibouti's position as a regional energy hub.
- The project includes constructing a petroleum storage depot and potentially establishing an oil refinery.
