CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
by ANB-BIA, Brussels, January 2000
THEME = ECONOMY
It has taken many years to achieve the exploitation of Chad's oil
resources,
involving the laying of a pipeline across Cameroon, during which time
political and military tensions have resurfaced in Chad,
a country exhausted by internal conflict
Chad is a country covering 1,284,000 sq.km., with a population of approximately 7 million. It covers three different natural regions: The tropical south (farming); the Sahel region (agriculture and cattle); and the Sahara (the provinces of Borkou, Ennedi and Tibesti, with a nomadic population). One writer puts it this way: "Chad is a patchwork of contrasts within all too clearly-defined borders... A multitude of languages, races, cultures, clans, all indicative of the so-called North-South divide". Following independence in 1960, these divisions have made Chad into a country with one of the most tumultuous histories in the whole of Africa.
For centuries, the north of the country was dominated by the Kanem- Bornou empire (founded in the 9th century) and the kingdoms of Baguirmi and Ouaddai (founded in the 16th and 17th centuries). Political power was centralised in these kingdoms, all faithful to Islam. Their economic power depended on the slave trade, taking defenceless people from the south of the country. French colonisation changed the balance of power. Based in the south, it brought in not only cotton growing, the main source of wealth for the country, but also education. All this led to the creation of nationalist movements and the taking control of the government after independence, under the presidency of François Tombalbaye. Various revolutionary movements culminated in Tombalbaye's assassination in 1975, followed by struggles between the northern clans, who fought for power with the help of Sudan and Libya. After Hissène Habré and Goukouni Oueddei, Idriss Déby took power in 1990, in a devastated country, weary of internal conflict. Déby's victory was, it is said, supported by France and the oil company Elf -þ oil already playing its part in politics. France still has about a thousand soldiers stationed in Chad.
Although some rebel movements continue to make their presence felt from time to time, such as Youssouf Togoïmi, a former member of the ruling class who took to the bush in 1998 in Tibesti, a degree of democracy has been established. Amnesty International and others, however, regularly accuse Chad of a clear failure to respect human rights.
Situated in the Sahel, Chad is classified as one of the poorest countries in the world. The human development index, places it as 163 out of 175 countries. 80% of its economy is based on agriculture, mainly cattle and cotton. Moreover, its lack of infrastructure is appalling. Transport is a clear example of this: there are only 300 kms of tarred roads in the whole country.
In this context, the discovery of oil is more than welcome to help the country escape from such underdevelopment.
By the end of the 1960s, it was clear that Chad had oil deposits in the south. President Tombalbaye appealed (in vain) to France to lend a hand to explore possibilities. He then turned to an American company, the Continental Oil Company (CONOCO), which, in 1969 obtained a exploration licence for more than 600,000 kms, from Lake Chad to the Doba region. All of a sudden, the following year, a French company obtained a permit for 152,000 kms. The exploration project was proving too large for CONOCO, however, which opened it up to other associates, thus forming a consortium. After many changes, from 1992 until just recently, the consortium was made up of three oil companies: Exxon and Shell each holding 40% of shares in the project; and Elf 20%. Politically, however, Elf's influence in this French-speaking country was greater than the number of its shares would indicate.
Chad's oil deposit has still not realised its commercial potential - this could take another twenty years. Chad is a land-locked country and exporting the oil means building a pipeline more than 1,000 kms long, a very expensive business, which in turn requires a sufficient volume of oil to make it profitable. There are currently three areas for exploitation proposed in the Doba region: Kome, Bolobo and Miandoum. Surveys carried out in 1996 and 1997 confirmed that there are crude reserves of about 150 million tonnes.
Because of Chad's landlocked situation, an agreement had to be found with a coastal country for export purposes. Cameroon, whose own oil output is dropping all the time, agreed (without too much difficulty) to allow a pipeline to be laid across its territory. In February 1996, a framework agreement was signed between the two countries and the oil consortium, setting transport conditions. The toll charges, set at $0.41 a barrel after difficult negotiations, should be enough to refloat Cameroon's state coffers.
The pipeline's route is from the Doba basin, in Chad, to the coastal town of Kribi, in southern Cameroon. It will be 1,076 kms long, 90% of it lying across Cameroon's territory, and will mainly involve the construction of access roads, three pumping stations and a marine loading terminal at Kibri. The oil pipeline itself will consist of steel pipes, 76 cm in diameter, laid in a trench 2 metres deep and 15 metres wide. According to experts, the work will be easier in Chad, where the landscape is fairly flat, but harder in Cameroon, where it has to cross mountains and forestland.
The overall cost of the project is estimated to be between 3.2 and 3.7 billion dollars. Production investment will be wholly financed by the consortium; 20% of the related investment (mainly the pipeline) will be met by the two countries (5% by Chad, 15% by Cameroon), and the rest by the consortium. The state financial contribution will be supported by international agencies, including the World Bank. The latter is supposed to guarantee control of the use of the wealth generated by the project, and of the environmental impact. Exxon's director general in Chad has even said: "This partnership is intended to ensure that the World Bank can confirm the best possible conditions are in place, both as regards the installation, taking all necessary steps to prevent an ecological disaster, as well as to protect us from accusations that the newly discovered providential wealth will not benefit the whole country".
Obviously, exploitation of the oil and the pipeline will impact on the population, their environment and living conditions. Many development and human rights NGOs, both national and international, have also taken an interest on what's happening.
The World Bank explicitly requested an environmental impact study, which began in 1995, financed by Exxon and carried out by the firm of Dames & Moore. Serious doubts were expressed, however, on the impartiality of this study. In order to avoid having to displace people whenever possible, the pipeline's route is scheduled to pass through ecologically sensitive areas. People living in and off the forest are particularly affected. In 1998, the World Bank's own experts expressed serious reservations about this study.
Pollution hazards are also a very real danger, as is seen from the example of oil exploitation in Nigeria. An American engineer, expert in oil pipelines, has stated that the most sophisticated leakage detection systems available, still allow an average of 0.002% of the oil to escape. This means, as far as the Doba operation and the pipeline are concerned, that about 10,000 litres of crude oil would escape every day into the environment. Leakage problems are basically insoluble along the pipeline itself. The risk of pollution on the Kribi coastline is also a factor.
Another problem relates to the compensation offered to the local people for compulsory purchase of land and associated damages. An initial list of indemnities was considered completely inadequate. It was then reviewed, but is still in dispute. Conversely, the tax concessions granted to the oil companies are considered to be exorbitant. A Chadian Member of Parliament, Yorungar, is one of the main opponents of the project. He estimates the total figure for tax exemptions over 30 years to be 21 billion dollars.
The World Bank also asked for assurances on the management of income from the project, to ensure that it is really used for the country's development. Chad finally opted for the following distribution of income: 80% of income would go on health, education, infrastructure and rural development; 15% on staffing costs and 5% would go to the prefecture of western Logone, where the Doba oil fields are located (in order to prevent the kind of seapages which occured in Nigeria). Parliament and a ten-member committee will monitor the use of these dividends. The composition of this committee is already in dispute, since it is not sufficiently representative of civil society.
Some people fear that control over the oil will remain within the hands of just a few people. President Déby has already sent 18 members of his own family for technical training in Algeria, and according to Member of Parliament Yorungar, others are learning about oil-related matters in various countries. Chad's unstable political climate has also led to fears, expressed by Amnesty International in particular, that foreign currency from oil sales will be used for arms purchases and strengthening of the system of repression in the country.
Despite all these reservations, many in Chad are still in favour of the project, which would provide the country with a significant windfall: an annual income of around 1.5 billion dollars. Most NGOs have said that they are not opposed to the project, subject to a great many conditions. Many development organisations and other associations have held seminars, stating their demands to the government and the consortium. In April 1999, they asked for a two- year moratorium to iron out the problems.
In the meantime, the decision of the World Bank is awaited. If it gives the go-ahead, there will still be a four-year wait before the crude oil arrives at Kibri, because the road and rail networks must be strengthened, the pipeline laid, wells drilled at Doba, and so on. On 30 September 1999, the president of the World Bank, James Wolfensohn, reiterated his institution's support for the project, despite opposition from environmentalists, whose arguments he rejected. On 15 November, the World Bank's board of directors had to decide on the fate of the exploitation project.
However, on 9 November came the dramatic news: the government of Chad announced that two companies, Shell and Elf, had decided to withdraw from the consortium. Shell actually stated that it was going to reconsider its participation, and Elf said it had not yet made a decision. The following week, it was learned that Exxon and its two partners were discussing a rearrangement of their mutual association. On 7 December, the newspaper Le Progrès, stated that around thirty oil companies, mainly American and British were ready to join the consortium. Officially, the withdrawal of Shell and Elf did not affect the World Bank's commitment to the project.
Some people believe that the Déby regime is coming to an end. Elf's withdrawal, announced by the French ambassador himself in N'Djamena, may be a sign that the President has been dropped by Paris. In the north, the Toubou rebellion led by Youssouf Togoïmi intensified its attacks throughout November, even if it is difficult to see how it could overcome Chad's army without outside help. What is more, on 21 December, thirteen armed political movements formed a new alliance against President Déby.
The future is therefore uncertain, both from a political point of view, and as regards the oil. This "Eldorado" still looks promising, however: the Doba oilfield could guarantee production for 25 years.
END
ENGLISH CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
PeaceLink 2000 - Reproduction
authorised, with usual acknowledgement