Chad-Cameroon Oil Pipeline

The Chad-Cameroon oil development and pipeline project is the largest private sector investment in sub-Saharan Africa. The project's total cost is 4.2 billion dollars and is lead by ExxonMobil. It involves the development of 300 wells in Chad, with an estimated extraction of approximately one billion barrels of oil over twenty-five years. The oil is to be transported via a newly constructed 1040 kilometre underground pipeline bypassing Cameroon to an offshore loading facility.

In the face of stiff resistance from NGOs in both countries, in 2000 the World Bank Group provided a 200 million dollar to the project, opening doors for other investors to fund the project. Subsequently, in 2001 the European Investment Bank provided project loans for the governments of the Chad and Cameroon (respectively 35.7 million euros and 20.3 million euros) as well as for Chevron and Exxon (respectively 34 million euros and 54 million euros).

These international multi-lateral banks presented the project as an opportunity for Chad to come out of its acute poverty while generating much needed revenue for Cameroon.

Environmental and social impacts

The Chad-Cameroon pipeline project has brought tremendous misery and devastation to the area. Thousands of people have had their lands expropriated, crops and other plants destroyed, and water sources polluted without adequate compensation. The indigenous peoples plan, prepared without participation from affected groups, does not address the issue of land security for these peoples. As a result, the indigenous people like the Bakola and Bagyeli pygmies living in Cameroon's rainforests have been drastically affected by the oil pipeline with negligible economic benefits.

The pipeline crosses sensitive and valuable ecosystems, particularly in Cameroon's coastal rainforests. The upgrading of access roads has led to logging and illegal poaching in remote areas, creating threats to endangered gorillas and chimpanzees. The pipeline traverses several major rivers, and construction has already caused oil spills and polluted the water system. The project's sponsors have claimed that they will compensate biodiversity loss through the establishment of so-called offset areas – the Campo Ma’an and Mbam-Djerem national parks – however the issue of funding these remains unclear.

In Cameroon, the treatment of effluents at the off-loading terminal and potential oil spills threaten marine life and fishing activities. Coastal communities have received little information about how to respond in an emergency situation. Severe dust pollution is adding to public health problems, and bad waste management of the oil and drilling fluids also threaten groundwater supplies in the oil field region.

In spite of a promised 5000 jobs, most of the work involved in the pipeline's development has been given to expatriates, while local people have end up with occasional short-term unqualified labour. Only 500 local people in both countries have received permanent jobs, albeit in low paid positions (as drivers, security guards and the like) with an average wage of 225 dollars per month, much less than the income of foreign workers. At the same time, the increased migrant workforce, in conjunction with poor sanitary services and increased prostitution in the regions, has led to alcohol abuse and the spread of diseases, including HIV, AIDS and other sexually transmitted diseases.

A Regional Development Plan was supposed to address the issues of health, energy, housing, and water supply in southern Chad. However, five years after the project's approval the regional development plan has still not been completed. As a result, the ruptures created by construction, including a massive public health crisis, have not been adequately addressed.

Who benefits?

The construction of the pipeline was finalised in 2003, a year ahead of schedule, while capacity building measures in Chad and Cameroon lagged behind. In 2003 Chad’s president, Idriss Deby, used a 25 million dollar “signing bonus” to re-arm his military, yet, no concerns were raised by the project's funders.

Most recently, in August 2008 the World Bank suspended its lending to Chad in 2008 after the government reneged on its promises to devote a percentage of its oil revenues to social spending and repeatedly used its newfound oil wealth for “security” issues.

In announcing its withdrawal from the pipeline – which is misleading since the World Bank Group is still financially involved in the Exxon-led consortium to the tune of 100 million dollars through its private investment arm, the International Finance Corporation, and presumably reaping significant profits – the World Bank appears to have come to terms with the fact that its only remaining move is largely symbolic, since its leverage and credibility have diminished: the 65-odd million dollars that Chad's government was asked to repay ahead of time is a pittance compared to the 1.4 billion dollars in oil revenues expected this year alone.

Notably, while the World Bank has gone public, the EIB has still not taken any position around the issue, in spite of increased human rights violations, militarisation and the violation of all project agreements by the Government of Chad.

Dialogue with NGOs

In spite of claims to the contrary, genuine public participation processes have not been implemented. In this context, the World Bank’s Inspection Panel concluded that: “Full and informed consultation is impossible if those consulted perceive that they could be penalized for expressing their opposition to, or honest opinions about, a Bank-financed project”.

According to Amnesty International, Chadian security forces carried out large-scale massacres of unarmed civilians in the oil-producing region in the late 1990s at the time of intense preparations for the Chad-Cameroon pipeline project preparations. Ever since then, intimidation and threats against villagers have been common. Yet the EIB still claims that “compensation settlements have been the subject of extensive local and regional discussions, including the involvement of local and international NGOs”.