Chad–Cameroon Petroleum Development and Pipeline Project

The Chad–Cameroon Petroleum Development and Pipeline Project is a controversial project to develop the production capacity of oilfields near Doba in southern Chad, and to create a 1,070 km pipeline to transport the oil to facilities on the coast of Cameroon. The project was launched on October 18, 2000. It is operated by ExxonMobil (40%), and also sponsored by Petronas Malaysia (35%) and Chevron (25%). The governments of Chad and Cameroon also have a combined 3% stake in the project.

It was largely funded by multilateral and bilateral credit financing provided by Western governments. Debt based financing came from the International Finance Corporation in the amount of US$100 million, the private sector arm of the World Bank Group and the French export credit agency, COFACE, and the US-Exim Bank which will each provided US$200 million. IFC-coordinated private lenders offered a further US$100 million.

Background

The original consortium of oil companies involved in the pipeline project were Exxon, Royal Dutch Shell and Elf Aquitaine. Negotiations started in 1988, with Chad and a consortium of oil companies signing a 30 year oil concession in the southern Chad region of Doba. In 1999, Royal Dutch Shell and Elf Aquitaine dropped the project due to controversies surrounding the project and volatile oil prices. As a result, Exxon opened the project up for bid to a select few corporations and in April 2000, Petronas of Malaysia and Chevron acquired stakes in the project. Exxon then enlisted the support of the World Bank to raise support within the international community. The World Bank agreed on the condition that certain environmental and social standards were enforced both in Chad and Cameroon, and that the revenues be put towards improving social and economic conditions.

Participants

Chad

Since 1990, President Idriss Deby has been the head of government in Chad. Democratic presidential elections are held every five years. Chad's economy is dependent mainly on agriculture and livestock. It heavily relies on foreign assistance and foreign capital, as well as international investment projects. Because of Chad's landlocked borders, it's economy struggles from a lack of resources and instability between rebel groups. The country also serves as a host to thousands of refugees from neighboring Sudan and Central African Republic, as well as many victims of human trafficking. Oil exploitation is estimated at a potential 1.5 million barrels, and Chinese companies are currently developing an oil refinery and another pipeline in the country.

Cameroon

The Republic of Cameroon has been ruled by President Paul Biya since November 6, 1982. A relatively peaceful and stable nation, Cameroon is a republic with a multiparty presidential regime. Although there are presidential elections every seven years, there exists no term limits. A climate of intense corruption has created an unequal distribution of wealth and poor conditions for domestic and international investments.

Cameroon Oil Transportation Company (COTCO)

The portion of the pipeline owned by Cameroon is managed by COTCO. This company is incorporated in Cameroon, and is a joint-venture between the governments of Cameroon and Chad, and the Upstream Consortium, an independent monitoring institution.

Tchad Oil Transportation Company (TOTCO)

TOTCO manages the pipeline within Chad that is owned by the country. TOTCO is incorporated in Tchad, and is a joint-venture between Chad and the Upstream Consortium.

World Bank

The World Bank's support was very important for the Consortium of oil companies, as they believed they needed the support of a humanitarian agency with international interests in order for the project to succeed.

While the project's private sponsors, the Upstream Consortium, provided about 95% ($2.2 billion USD) of the financing for the pipeline, the World Bank also contributed through debt financing. The International Finance Corporation (IFC) provided a loan of about $100 million USD. $85.8 million of this went to COTCO and $14.2 million went to TOTCO, Cameroon and Chad's respective oil management companies. The IFC also aided in securing an additional US $300 million in private commercial lending for COTCO and TOTCO. The International Bank for Reconstruction and Development (IBRD) provided US $92.9 million to Chad ($39.5 million) and Cameroon ($53.4 million) to finance the countries joint-venture pipeline companies. Last of the World Bank-provided financing was given through the European Investment Bank (EIB) which provided US $46.6 million to finance Cameroon and Chad's equity in COTCO and TOTCO.

Included in plans for the project was a revenue management law developed by the World Bank. This separated the oil revenues given to Chad into four required areas: a Future Generations Fund, health, education and other development projects, a fund to compensate the Doba region of Chad from where the oil was extracted and government reserves. The revenue management law also created the Petroleum Revenue Oversight Committee. The committee was established to oversee the spending of the oil revenues, and would include members of both the Chadian government and civil society.

Controversy

The pipeline project has been affected by persistent charges and fears about corruption and the diversion of revenues — ostensibly intended for poverty reduction — towards arms purchases, particularly by the regime of Chadian President Idriss Déby. Delphine Djiraibe, a human rights attorney who became one of the leading critics of these arms purchases, was later awarded the 2004 Robert F. Kennedy Human Rights Award for her work against the project.

Opposition leader and parliamentarian Ngarledjy Yorongar of the Front of Action Forces for the Republic (FAR) accused National Assembly President Wadal Abdelkader Kamougue of taking a bribe from Elf, then a partner in the project, in 1997. Yorongar was stripped of his parliamentary immunity and detained for nine months. In November 2000, the World Bank announced that $4 million of a $25 million signing bonus from the oil companies was spent by the Chadian government on weapons. The World Bank required tight restrictions on oil revenues as a condition of its loans. In January 2006, Chad moved to unilaterally increase the portion of oil revenues going to its general fund from 15 to 30 percent.

On 28 August 2006, President Déby ordered Chevron and Petronas to quit the country.

Environmental Impacts

In Chad and especially Cameroon, through which the pipeline stretches 890 km of the total 1070 km, there have been claims of adverse effects of the construction and maintenance of the pipeline on the indigenous communities and environment. One of the largest areas affected is in the coastal Cameroonian town of Kribi. Located eleven miles off the coast of Kribi is the export terminal facility. There has been much controversy regarding the alleged degradation the coastal reefs during construction. This has not only impacted the underwater habitat, but also the livelihoods of the local people who depend on fishing as their main source of income.

Since completion of the pipeline in 2007, there have been two known oil leaks at the transfer site eleven miles off the shore of Cameroon. The first occurred on January 15, 2007. Representatives for COTCO claimed that the leak was contained within a few hours and that the amount of spilled was not sufficient to cause any harm, though local fishermen did claim to have seen traces of the oil ashore. The second oil spill was on April 22, 2010 at the same site. COTCO stated that the leaked oil amounted to less than five barrels. Cameroonian NGO's Relufa and Centre pour l'Environnement et le Developpement have brought to light the inefficiencies of the oil-spill preparedness plan, as well as the lack of communication between COTCO and the surrounding communities.

International Involvement

Non-governmental institutions

Non-governmental organizations have played a large role in mediating the concerns of the international community with the needs of the indigenous communities of Chad and Cameroon. Even before construction commenced on the pipeline project in 2000, international and local NGO's were monitoring the situation and meeting with representatives from the World Bank and the Consortium of gasoline companies. After the completion of the project, NGO's were also very involved with documentation of any problems and worked in conjunction with external independent monitoring agencies.

In 2005, under the direction of the World Bank's International Advisory Group, a group of stakeholders including COTCO, the CPSP and multiple NGO's created a platform under which complaints registered with the World Bank by organizations and individuals could be resolved. According to FOCARFE (Fondation Camerounaise d'Actions Rationalisees et de Formation sur l'Environnement), more than 300 civil society complaints existed by the close of construction in 2003.

In November 2006, the stakeholders involved in the project came together to discuss their views, main issues and concerns for a Forum of Information on the Chad-Cameroon Pipeline Project. The stakeholders involved were the Cameroon Oil Transportation Company (COTCO), the Comite de Pilotage et de Suivi des Pipelines (the Pipelines Steering and Monitoring Committee) and a group of four Cameroonian NGO's: CED (Centre pour l'Environnement et le Developpement), RELUFA (Reseau de Lutte contra le Faim), CARFAD (African Center for Applied Forestry Research and Development) and FOCARFE (Fondation Camerounaise d'Actions Rationalisees et de Formation sur l'Environnement). The meeting was held to discuss a wide array of topics, including the monitoring of the pipeline activities, environmental and social compensation plans, CAPECE's capacity building objectives and the involvement of NGO's.

• Environmental Defense
• Friends of the Earth

Friends of the Earth is a transnational grassroots environmental network. The organization brings together and mobilizes social and environmental advocacy groups from all over the world to rally behind certain issues. While FOE has been involved in documentation and monitoring of pipeline project since its construction, the organization more recently developed a report in 2008 condemning a World Bank initiative for "New Climate Funds". Along with four other advocacy organizations, FOE stated that the World Bank had repeatedly engaged in projects, such as the Chad-Cameroon pipeline, that actually negatively affected the environment and only added to pollution.

• Centre pour L'Environnement et le Developpement

The Center for Environment and Development is a Cameroon-based NGO founded and run by native lawyer Samuel Nguiffo. The CED's main purpose is to advocate and campaign against the "liquidation of the regions forests for short-term profit". Certain exploitations within the Cameroon region include logging, hunting for bushmeat, mining for natural resources and the construction of the Chad-Cameroon pipeline. The CED works to inform local communities about their rights to land and community forest concessions, as well as constant documentation and publications to educate the international community.

• RELUFA: The Reseau de Lutte contre la Faim
• CARFAD (African Center for Applied Forestry Research and Development)
• FOCARFE (Fondation Camerounaise d'Actions Rationalisees et de Formation sur l'Environnement)
• Catholic Relief Services

Catholic Relief Services, an international nonprofit humanitarian organization, has been one of they key watchdogs in the pipeline project, even before construction was completed. In a statement made in October or 2003, they stated their concerns for the people and environment of both Chad and Cameroon, and anticipated negative effects of the pipeline for the future. One of their main concerns for the project was the potential mismanagement of profit funds by Chad and Cameroon, as well as the ineffectiveness of policies mandated by the World Bank.

The Cameroon Chad Pipeline Monitoring Project is an initiative created by CRS that supports the efforts of Cameroonian NGO's as they advocate for proper use of profits from the pipeline, as well as the communities and environment surrounding the pipeline. One of the main efforts of the Catholic Relief Services has been to review and correct compensation packages received by those located along the pipeline, as well as advocating for fair salaries for local workers contracted by the oil companies.

See also

• Economy of Chad
• Economy of Cameroon

External links

• World Bank overview (last updated October, 2004)

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