South Sudan oil: the case for rail

[John Ashworth]

Attached and copied below is a paper written by two prominent South Sudan experts in the USA, Sharon Hutchinson and Eric Reeves. Needless to say, I support their view! Maybe I should add that they are not railway enthusiasts but write from a political, cultural and economic perspective.

John

BEGIN

Oil Transport from South Sudan to the Kenyan Coast:

An alternative to the oil pipeline proposal that would promote immediate employment, national unity, and long-term economic growth
 
Sharon Hutchinson, Eric Reeves
February 4, 2012
 
While supportive of the goal of the Republic of South Sudan to reduce its dependence on Khartoum for oil exportation, building an oil pipeline to the Kenyan coast may not be the most useful nor cost-effective way to achieve this. Rather, we are convinced that the oil should be moved by rail.
 
The building of a rail line to Kenya has major advantages over the oil pipeline proposal. While rail transport would move oil less rapidly than a pipeline, this could prove an advantage because it could provide greater flexibility and control in responding to oil price fluctuations and permit longer term monetization of this finite natural resource. 
 
Major Advantages:
 
 
•Speed of construction: Many financial and industry experts have raised questions about the overall feasibility, cost and length of time required to construct an oil pipeline to Kenya.  A rail line, by contrast, could be constructed much more rapidly, at considerably less cost, and without many of the technical problems that would inevitably accompany pipeline construction.
 
•Employment: A rail line could provide an immediate and significant source of employment for South Sudanese, since rail construction does not require the same technical expertise oil pipeline construction does; moreover, an expanding train system within South Sudan would continue to provide jobs for the future, something that can't be said of a completed pipeline.
 
•National unity: A national rail line would be a truly national project, linking regions and with the potential to bring all of South Sudan within a continually growing transport system. An initial rail line can serve as the beginning of a key part of the transportation infrastructure for South Sudan; the possibilities for rail spurs, extensions, and new lines are multiple. In some areas, a train will provide creative possibilities for trade, as opposed to raiding.  The rail line would be symbol of national pride and resourcefulness; it would connect people, provide for improvements in national security, and speed movement of food in times of shortage.
 
•Help to create an import and export economy: A rail line can carry products other than crude oil for export, and—crucially, we believe—will allow for imports as well.  The image of an oil pipeline is that of a one-way extraction of resources from Africa; a rail line, moving a range of both imports and exports, presents an entirely different picture, and will connect South Sudan with the world at large in flexible and strategic ways. A rail line can carry cattle, gold, agricultural and other products to bolster nascent domestic markets as well as generate revenue from exports.

•Expand the geographical reach of community services:
Unlike a pipeline, a railway could be fitted with special cars for the delivery of government-supported services in the areas of veterinary medicine, primary health service, emergency food supplies, etc. so as to bring tangible and socially inclusive “peace dividends” to greater numbers of citizens more cheaply and more quickly than fixed delivery centers.
 
•Strengthen regional ties with Kenya:  Unlike a pipeline, a rail line could stimulate multiple economic initiatives, local entrepreneurship and economic growth that would benefit Kenyans and South Sudanese.  A rail line designed to benefit Kenyan communities would face less potential opposition and thereby diminish long-term security concerns.     
 
•The benefits of a rail line: A rail line could last indefinitely, continuing to grow and serve the peoples and economies of South Sudan and Kenya for many generations;  in contrast, the utility of an oil pipeline would end with the depletion of this finite resource.
 
Other advantages:
 
•A rail line is much less expensive to construct than a pipeline, almost certainly much less than half the cost;
 
•The Bretton Woods institutions and other sources of financing would look much more favorably on supporting a rail line than a pipeline, especially given the two-way nature of such a transport system and the possibilities for both significant non-oil exports, and inexpensive imports; an international cost/benefit analysis of a rail line vs. a pipeline will certainly favor the former.

•A rail line is less vulnerable to assault or damage, and can be repaired much more quickly in the event of damage from any source; oil transport itself would be considerably more secure, especially since a train could be equipped with cars carrying security forces.
 
•A rail line does not create a natural barrier, as an oil pipeline often does;
 
•There are considerable environmental advantages, especially in areas where a ruptured pipeline would do tremendous damage to the local ecology.
 
Conclusion: What might appear to be the sole disadvantage—a rail line can move much less oil than a pipeline on a daily basis—is actually an advantage: it will be better in the long run if South Sudan uses revenues from this natural resource over a longer period of time, thus extending the revenue stream for a number of years and maximizing what can be extracted from well sites.
 
Again, we strongly support the RSS's goal to actualize its political and economic independence. The question of how to do so remains urgent. I hope that it is not too late for a robust discussion of the potential advantages of a rail line, as opposed to an oil pipeline, to the Kenyan coast.
 
Respectfully,
 
Sharon Hutchinson,
University of Wisconsin

Eric Reeves,
Smith College