IRIN Focus on the Chad-Cameroon oil project

Chad’s government is looking for new investors for a massive oil project following a decision by two transnationals to review their decision to invest in it. Chadian Information Minister Moussa Dago told IRIN last Thursday that Royal Dutch Shell and Elf informed the government on 8 November that they had decided to withdraw from the Chad-Cameroon Petroleum Development and Pipeline (PDP) project. He said the third transnational involved in the project, Exxon, had since confirmed that it would continue to back it and was also seeking new investors. Dago said the withdrawal had come as a surprise. He told IRIN the two transnationals, which together account for 60 percent of foreign investment in the PDP, said their decision was based on economic considerations. However, they were involved in preparations for the project for years and their sudden change of heart just before the World Bank is to decide whether to finance it gave the impression that the decision was a political one, he said. James Herbert, a Shell spokesman, told IRIN from London on 11 November that the transnational had not decided to withdraw from the project. “Shell is considering its position with regard to the project,” he said. He added that following an internal review that Shell has undertaken, it has been decided that the project does not have a high priority with regard to Shell’s long-term investment strategy, but denied that a decision had been made to withdraw. Various media reported this week that the companies had decided on a phased withdrawal and, on Tuesday, thousands of people marched through the streets of Ndjamena in protest against the pullout. Chad’s minister of mines and energy, Abdoulaye Lamana, said on the BBC that the government had considered it its duty to fully inform the population, who had hoped to see the project started in the year 2000, and they reacted on Tuesday by showing their anger at the pullout. Chad’s government views the PDP as extremely important, according to Dago. “It’s the biggest investment project in Sub-Saharan Africa, about US $3 billion dollars” he said. “It involves not only Chad but also Cameroon. For Chad it is extremely important for infrastructure, poverty reduction and improving living conditions.” According to a background document produced by the World Bank, the Petroleum Development and Pipeline Project (PDP)is expected to generate about US $2.5 billion in royalties, tax revenue and dividends for Chad over its 25-year life span. This translates into US $100 million a year on average or roughly 40 percent of the goods and services exported annually by the landlocked country, whose social indicators are among the world’s lowest: life expectancy is 50 years, about 58 percent of boys and 33 percent of girls are enrolled in primary school and only about a quarter of the seven million Chadians have access to safe water, according to the background document. The PDP entails the mining of oil reserves estimated at one billion barrels in the Doba basin of south-western Chad and the construction of a pipeline from there to the Cameroonian port of Kribi, 1050 kms away, through which the Chadian crude will be exported. Cameroon, for its part, stands to gain about US $500 million in transit fees, taxes and dividends from the transport of the oil from Chad. From Yaounde, the coordinator of a group of Cameroonian non-governmental organisations (NGOs) backing the project told IRIN the news that the two transnationals had pulled out had come as a disappointment. “We shall continue to support the pipeline project because we believe it will contribute to poverty alleviation in Cameroon,” Pauline Biyong, coordinator of the African Poverty Reduction Network (APRN) told IRIN. On the other hand, environmental groups have come out against the project. Action Alert, an international NGO, has been campaigning against the PDP which, it says, is fraught with environmental dangers. These include groundwater contamination and pollution “that would affect forests, land, including farmland in southern Chad where most of the country’s food is grown, coastal waters and important regional river systems.” Action Alert adds that the pipeline would run through or close to areas inhabited by indigenous peoples and endangered animal species, charges which the project’s promoters have denied, saying that its start-up was delayed in order to re-route the pipeline away from such areas.