Chad’s oil experiment
The first shipment of crude from Chad to Kribi and on to world markets was announced by Associated Press correspondent Emmanuel Tumanjong in an October 5, 2003 news story filed in Yaounde, Cameroon.
First Crude Shipped in West Africa Project
“The first oil tanker carrying the first 950,000 barrels left the Cameroon port of Kribi for world markets on Friday, October 3. The oil, which originated in the landlocked nation of Chad, arrived in Cameroon via a massive 665-mile pipeline constructed at a cost of $3.7 billion. The pipeline project included development of 300 wells in the Doba oil fields in southern Chad. The oil fields are estimated to hold reserves of more than 900 million barrels.
“The pipeline was conceived in 1996 with support from the Bill Clinton administration… [and] developed by an international consortium, with ExxonMobile holding a 40 percent stake, Malaysia’s Petronas 35 percent, and ChevronTexaco 25 percent. Funded in part by the World Bank (3%), the oil pipeline project is aimed at developing West African oil as an alternative to Mideast supplies … [and represents] the World Bank’s largest-ever investment in sub-Saharan Africa.”
According to Tumanjong, the Bush administration, “hopeful of lessening U.S. dependence on Mideast oil, has pushed development of West Africa’s industry.
“West Africa, led by Nigeria, already supplies the United States with about one-fifth of its oil — roughly equal to Saudi Arabia’s share of the U.S. market.
“The World Bank has set up an independent monitoring panel to oversee accounting — an unprecedented undertaking in a region known for corruption, plutocracy and environmental disasters. Other financiers include the European Investment Bank, US Export-Import Bank, the French export credit agency COFACE and a group of private banks led by Dutch ABN-Amro and Credit Agricole Indosuez.
“Backers say daily production will hit 250,000 barrels at peak and revenues could reach $2 billion for Chad and $500 million for Cameroon over the projected 25-year production period….Chad’s leaders have pledged to invest the majority of expected oil revenues in programs to lift the country out of poverty and to develop health, educational, and agricultural sectors….International environmental organizations, notably in the United States and Germany, have called the project a danger to Cameroon’s rain forest and to Pygmies living there.”
…Fast forward five years:
World Bank pulls out of pioneering oil deal with Chad
“The World Bank has quietly cancelled a “model” oil pipeline agreement with Chad after revenues meant to be spent on schools and hospitals were instead used to consolidate President Idriss Deby’s grip on power.
“The innovative deal, signed in 2000, was supposed to ensure that the oil wealth in one of the world’s poorest and most corrupt countries was not wasted. But this week the World Bank confirmed that it had pulled out of the project it had helped finance, after Chad agreed to repay a $140m (£70m) loan ahead of schedule.
“In a statement, the World Bank said that Deby’s government had failed to “allocate adequate resources critical for poverty reduction” as set out in the original agreement.
“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,” it said.
“The decision is deeply embarrassing for the World Bank. It had hoped that the experiment could serve as an example for other developing countries on how to ensure transparency and avoid the “resource curse”, where the profits from a country’s natural wealth are pocketed by the ruling elite.
“Despite warnings from civil society groups that Deby’s regime was incapable of effectively managing a sudden inflow of petrodollars, the World Bank agreed to part-finance the construction of a 620-mile, $4.2bn pipeline linking landlocked Chad to terminals on Cameroon’s Atlantic coast. Its support added crucial credibility to what was at the time the largest-ever private sector investment in sub-Saharan Africa – in one of the continent’s most unstable countries.
“In return for the World Bank’s blessing, Chad’s government agreed to spend 72% of oil royalties, expected to reach $1.4bn this year, on building schools, hospitals and roads. A further 10% was to have been held back for future generations. The safeguards were considered crucial given that reserves are only expected to last 30 years; the oil bonanza is Chad’s one chance at rapid development.
“But although an independent oversight commission was set up to monitor how the revenues were spent, it was prevented from properly doing its work once the oil began to flow in 2003. The anti-poverty spending targets never came close to being met.
“Deby repeatedly tried to have the revenue agreement renegotiated to allow the government to spend more oil money as it pleased. He won some concessions from the World Bank in 2006, and then sought to deflect domestic criticism of the lack of development by arguing that outsiders “had imposed injustice on us”. Describing the government’s share of the revenue from the 170,000 barrels a day as “crumbs”, he temporarily expelled US company Chevron and Petronas, the Malaysian state-owned firm, which together with Exxon Mobil run most of the oil operations in Chad.
“Over the past year, as Deby’s own future has looked increasingly insecure, with rebels attacking the capital, he has signed decrees giving him greater personal control over the country’s finances. A significant chunk of the oil revenue is believed to have been spent on the military.”
by Xan Rice, www.guardian.co.uk 11 September 2008
