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 pipeline to transport the oil to a floating storage and offloading vessel (FSO), anchored off the coast of Cameroon, near the city of Kribi. It is operated by ExxonMobil (40%) and also sponsored by partners forming the consortium, Petronas (35%) and Chevron (25%). The governments of Chad and Cameroon also have a combined 3% stake in the project. The project was launched on October 18, 2000, and completed in June 2003 (the official inauguration took place in October of the same year).
It was largely funded by multilateral and bilateral credit financing provided by Western governments. The International Finance Corporation, the private-sector arm of the World Bank, provided $100 million of debt-based financing, and France's export credit agency COFACE and the U.S. Export-Import Bank each provided $200 million; private lenders coordinated by the IFC provided an additional $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, where 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, its 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 billion barrels, and Chinese companies are currently developing an oil refinery and another pipeline in the country.
The Tchad Oil Transportation Company (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.
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 are no term limits. A climate of intense corruption has created an unequal distribution of wealth and poor conditions for domestic and international investments.
The portion of the pipeline owned by Cameroon is managed by the Cameroon Oil Transportation Company (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.
World Bank
The World Bank's support was very important for the Consortium of oil companies, as they believed they needed the support of the Bank in order for the project to succeed.
While the project's private sponsors, the Upstream Consortium, provided about 95% ($2.2 billion) 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, $85.8 million of which went to COTCO and $14.2 million of which went to TOTCO, and also helped secure an additional $300 million in private commercial lending. The International Bank for Reconstruction and Development (IBRD) provided $92.9 million to Chad ($39.5 million) and Cameroon ($53.4 million) to finance the joint-venture pipeline companies. Last of the World Bank-provided financing was given through the European Investment Bank, which provided $46.6 million to finance Cameroon and Chad's equity in COTCO and TOTCO.