Chad-Cameroon Pipeline

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Background

The 1070 kilometre Chad-Cameroon pipeline was commissioned in 2003 and runs from its loading terminal at Kribi on the Atlantic coast of Cameroon to the source of its crude oil, the Doba oil fields of southern Chad.[1] The construction is the result of the $4.2 billion effort from a World Bank-backed consortium[2], involving ExxonMobil, Chevron, Petronas, and the governments of Chad and Cameroon.[3] The operators of the pipeline are the Tchad Oil Transportation Company (TOTCO) in Chad, and the Cameroon Oil Transportation Company (COTCO) in Cameroon.[4]

The International Finance Corporation (IFC), the private sector investment arm of the World Bank, described the project as a "pioneering and collaborative effort" that would demonstrate the possibility for large scale projects within the extractive industry to significantly improve prospects for sustainable long term development, when they were designed with transparency assurances and effective environmental and social mitigation.[5]

The World Bank provided a loan of US$ 39.5 million to Chad and of US$ 53.4 million to Cameroon. The IFC loaned $100 million each to TOTCO and COTCO.[6]

Controversy

The Pipeline received heavy financial backing and technical assistance from the World Bank. In 2007 the World Bank reported that citizens of the oil producing region around Doba and Bébédja were beginning to see benefits from the project due to a policy that sends five percent of oil revenues back to the region. It said that school buildings and equipment, water towers and modern markets were being built and refurbished as a result of the additional US$ 30 million that had been generated.[7]

However, in September 2008 the World Bank announced that it was ending its support for the Chad-Cameroon pipeline.[8] In an official statement, the World Bank said: "Over the years, Chad failed to comply with key requirements of this agreement. A new agreement was signed in 2006, but once again the government did not allocate adequate resources critical for poverty reduction in education, health, infrastructure, rural development and governance. Regrettably, it became evident that the arrangements that had underpinned the Bank’s involvement in the Chad/Cameroon pipeline project were not working. The Bank therefore concluded that it could not continue to support this project under these circumstances."[9]

According to the Bank Information Center, the World Bank's project had faced persistent problems since the pipeline was commissioned in 2003.[8] They claim that the financial system put in place to manage and monitor Chad’s oil revenues never worked successfully, illustrated by the fact that President Idriss Deby used the $25 million signing-on bonus to re-arm his military.

Concerns have also been raised over the socio-economic and the environmental credentials of the project. The Pulitzer Center reported that "six years after oil began to flow on the controversial, World Bank-supported Chad-Cameroon pipeline, many of its opponents' warnings have come to pass: minimal job creation, growing poverty, increasing civil strife and environmental damage. But the oil companies are reaping enormous benefits and the leaders of Chad and Cameroon are profiting handsomely as well."[1]

Proposed use by Niger

In March 2012 the Nigerien Foreign Minister, Mohamed Bazoum, and Oil Minister, Foumakoye Gado, reached an agreement with Chad to ship crude oil from its Agadem Oilfield for export through the Chad-Cameroon pipeline.[10] The Foreign Minister made the announcement on state television that he had asked for permission from Chad to allow Niger to export oil through a pipeline that would link into the Chad-Cameroon Pipeline system. He claimed that the Chadian president gave him a "positive response".[10] Although the project’s start date had yet to be confirmed, the Foreign Minister stated in early 2012 that plans for negotiations on the technical and environmental details of the project had been made.[11]

References

  1. 1.0 1.1 "Pipeline Dreams: Journey along Chad-Cameroon Oil Pipeline" Pulitzer Center on Crisis Reporting, retrieved 3 April 2012.
  2. "Cameroon: Pipeline to Prosperity?" Frontline World, retrieved 3 April 2012.
  3. "Catholic Relief Service and the Chad-Cameroon Pipeline Project" Catholic Relief Service, retrieved 3 April 2012.
  4. "Cameroon's Challenged Energy Sector" Wikileaks, retrieved 4 April 2012.
  5. "Fact Sheet on Chad-Cameroon Pipeline" International Finance Corporation, retrieved 17 April 2012.
  6. "Project Description" World Bank, retrieved 17 April 2012.
  7. "Chad-Cameroon Pipeline Project FAQs" World Bank, retrieved 17 April 2012.
  8. 8.0 8.1 "World Bank announces withdrawal from Chad-Cameroon Pipeline after early repayment" Bank Information Center, retrieved 3 April 2012.
  9. "World Bank Statement of Chad-Cameroon Pipeline" World Bank 9 September 2008.
  10. 10.0 10.1 "Niger to ship crude through Chad-Cameroon Pipeline" Reuters Africa, retrieved 3 April 2012.
  11. "Niger and Chad reach agreement over crude oil pipeline" Energy Global, retrieved 3 April 2012.