(JUBA) – A London High Court ruling has temporarily blocked South Sudan from entering new oil prepayment agreements until outstanding debts owed to commodity trading company BB Energy are settled, increasing pressure on the country’s already strained public finances.
The court ruling, issued on Friday, prevents South Sudan from accepting fresh advance payments linked to future crude oil cargoes pending another hearing scheduled for June 5 or until the debt dispute is resolved.
The legal case centres on claims by BB Energy that South Sudan failed to deliver crude oil cargoes purchased under prepayment agreements signed in 2024 and 2025.
According to court documents seen by Reuters, the initial hearing was conducted without defence lawyers representing South Sudan, with a further hearing expected to review the order.
Under the ruling, South Sudan must not enter into any new arrangements involving advance payments tied to future exports of Dar Blend or Nile Blend crude oil cargoes.
The court also warned that any individual or organisation knowingly helping South Sudan breach the order could face penalties including fines, imprisonment or seizure of assets under contempt of court rules.
The case has drawn attention to the financial risks linked to oil backed financing arrangements commonly used by oil producing countries facing budget shortages and limited access to international borrowing.
South Sudan depends heavily on oil exports for government revenues, with crude sales accounting for the majority of public income and foreign currency earnings.
Oil prepayment arrangements have previously helped the government secure advance financing for public spending, infrastructure projects and salary obligations during periods of economic pressure.
However, analysts say such deals can expose governments to legal disputes and future revenue shortages if oil deliveries are delayed or production falls below expectations.
Officials from South Sudan’s Ministry of Petroleum and government spokesperson Ateny Wek Ateny did not immediately respond to requests for comment on the ruling.
Last November, BB Energy allowed an earlier court injunction linked to a specific South Sudan oil cargo to expire after both sides reached what was described as an amicable arrangement with the Ministry of Petroleum.
BB Energy later loaded its first cargo under the 2025 prepayment contract in February this year. However, the company says it has not received additional oil cargoes since then.
A spokesperson for BB Energy said the latest court order should help ensure more crude cargoes remain available for South Sudan to meet its obligations under existing agreements instead of being allocated to new prepayment arrangements with other parties.
The financial value of the disputed oil cargoes was not disclosed in the court documents. However, oil backed prepayment arrangements involving South Sudan have historically been worth hundreds of millions of US Dollars, often translating into trillions of South Sudan Pounds at current exchange rates.
Economic observers warn that restrictions on future oil prepayment deals could tighten liquidity pressures for the government at a time when South Sudan continues to face inflation, currency weakness and rising fiscal demands.
The dispute also comes as South Sudan seeks to stabilise oil production and improve confidence among international energy traders and financial partners following years of conflict related disruptions and pipeline challenges affecting exports through Sudan.
Market analysts say the outcome of the London court proceedings may influence how future commodity traders and lenders engage with South Sudan’s oil sector and sovereign financing arrangements.