Chad-Cameroon oil pipeline

“The project will have a positive economic impact on Cameroon and will constitute a real breakthrough for Chad, one of the least developed countries in the world.” – EIB press release 22.6.2001

This 1070 kilometre pipeline project stretches from three oil fields in the Doba Basin in southern Chad through Cameroon to the Atlantic and represents the single largest on-shore investment in Africa today. The project is estimated to cost USD 4.2 billion, involving the drilling of 300 oil wells in the Doba fields of southern Chad and the installation of an offshore terminal facility – a marine terminal at Kribi and marine pipeline to a floating storage off-loading vessel.

The project was promoted with claims of eventual poverty reduction and millions of dollars in revenues for Chad from oil exports. The World Bank Group first gave the green light to the project in 2000, followed by the EIB, in order to clear the way for the financial involvement of Exxon Mobil (40 percent), Petronas-Malaysia (35 percent) and Chevron US (25 percent). The EIB provided total lending of EUR 144 million both to the countries of Chad and Cameroon, as well as to the 3-member oil consortium..

Despite these promises, since the project’s completion in 2003 and the commencement of oil flows making Chad the youngest African oil export country, the project has proved to have only further aggravated the problems of the country. It has fueled violence, impoverished people in the oil fields and along the pipeline route exacerbated pressures on indigenous peoples and created new environmental problems. At the same time, with about 118 million barrels of oil produced by September 30, 2005, ExxonMobil, the leader of the oil consortium and the world’s largest oil company, has registered record profits.

In 2006 the World Bank temporarily suspended their lending to Chad after the government decided to break its pledges to devote a percentage of its oil revenues to social spending, changed legislation to that effect. The IMF and the World Bank have admitted that instead a significant amount of exceptional expenses were allocated to Chad’s national defence budget. The EIB closely followed the World Bank’s decision in 2006, merely declaring that it was suspending “co-operation on any new projects with the public sector in Chad.”

Currently, despite the continuing unstable situation in Chad, the World Bank has resumed lending.

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