South Sudan's economy is heavily reliant on oil exports, with the commodity accounting for approximately 98 percent of the state's budget. The country's crude oil is currently transported through Sudan, with an average of 165,000 barrels per day shipped between September and December 2025. However, this supply chain has been disrupted multiple times due to conflicts in Sudan, including a pipeline shutdown in February 2024 and drone strikes on processing facilities in November 2025.
The disruptions to the oil supply chain have significant implications for South Sudan's economy. In December 2025, the Rapid Support Forces seized Heglig, the hub at the center of the pipeline network, further exacerbating the situation. The country's reliance on a single, vulnerable route has led to calls for diversification and alternative export options. Kenya's new refinery, which broke ground in Lamu, offers a potential solution.
The Dangote-backed refinery in Lamu is designed to process 700,000 barrels of oil per day and is expected to be completed around 2030. However, the project faces challenges, including securing a reliable crude oil supply. Kenya does not yet produce commercially, and Uganda's oil is committed to the backers of its own export pipeline. South Sudan, which holds significant oil reserves, could potentially supply the refinery, but no agreements have been made.
Analysts expect the refinery to run largely on blends of imported crude from West Africa, the Middle East, and the Americas. Nevertheless, South Sudan's potential to supply the refinery presents an opportunity for the country to negotiate a long-term supply agreement and potentially secure a stake in the project. The Kenyan government has reportedly offered a combined 30 percent stake in the project to Kenya, Ethiopia, and Rwanda, but South Sudan was not named.
The Lamu refinery also offers benefits beyond exports, including reducing East Africa's estimated $20 billion annual fuel import bill. The refinery is expected to supply Kenya, Uganda, Tanzania, and South Sudan, potentially lowering costs and shortening supply lines for the landlocked country. Additionally, the fertilizer and chemical industries planned around the plant may provide opportunities for South Sudan to add value to its own crude oil.
However, several challenges need to be addressed, including the construction of a pipeline to transport crude oil from South Sudan to the refinery. A feasibility study commissioned by Juba found both a Lamu route and a Djibouti route technically viable, but neither was built. South Sudan's government should prioritize negotiating a long-term supply agreement, securing a stake in the project, and reviving the pipeline study to make the refinery a viable option.
The author, Denis Dumo, a former South Sudanese journalist and media expert, emphasizes that the Lamu refinery presents the best opportunity for South Sudan to reduce its dependence on a single, vulnerable export route. While risks are associated with the project, including securing funding and constructing a pipeline, the alternative is to continue relying on a corridor that has repeatedly failed.
Key points
- South Sudan's economy is heavily reliant on oil exports through Sudan, which has been disrupted multiple times due to conflicts.
- Kenya's new $16-17 billion refinery in Lamu offers a potential alternative export route for South Sudan's oil.
- South Sudan's government should prioritize negotiating a long-term supply agreement and securing a stake in the project to make the refinery a viable option.
