The US Opens South Sudan's Oil Sector

The Office of Foreign Assets Control (OFAC) announced in a December 8, 2011 Federal Register Notice that it was lifting economic sanctions that had prohibited U.S. Persons from dealings with the petroleum and petrochemical sector in the Republic of South Sudan. Sanctions were were imposed in 1997 because of the benefit the Government of Sudan receivesfrom crude oil that makes its way to market at Port Sudan via pipelines through Sudan – and the Government of Sudan receives some benefit from this process.

The amendments to the Sudan Sanctions Regulations, 31 CFR Part 538, authorized U.S. citizens and companies, to engage in “all activities and transactions relating to the petroleum and petrochemical industries in the Republic of South Sudan.” This new general license permits involvement in exploration, development, production and investment in the petroleum and petrochemical industries in South Sudan. However, the regulation explicitly allows American participation in downstream activities, including the refining, sale and transport of petroleum from South Sudan, so long as the petroleum is not refined in Sudan.