Traversing Peoples Lives, 2003 (Cameroun – Chad)

The Chad-Cameroon Oil and Pipeline Project is the biggest foreign investment project in sub-Sahara Africa today. It involves the drilling of 300 oil wells in the Doba region in the South of Chad and the construction of a 1070 km pipeline to transport the oil from Chad through Cameroon to an offshore loading facility at the Atlantic Coast. The offshore terminal facility will be connected to the port of Kribi by an 11 km underwater pipeline. The expected oil production is 225,000 barrels per day. The project is expected to start operating end of 2003.

The project sponsors are ExxonMobil of the U.S (operator, with 40% of the private equity), Petronas of Malaysia (35%) and Chevron of the U.S (25%). The project is estimated to cost US$3.7 billion. Apart from the World Bank, the project is financed by the European Investment Bank (144 million euros), US Export-Import Bank (US$200 million), the French export credit agency COFACE (US$200 million) and a consortium of private banks lead by Dutch ABN-Amro and Crédit Agricole Indosuez.

First, although the amount of loss, and the compensation claimed sometimes appears modest by Western standards, for those involved the situation poses a veritable drama. The losses they face sometimes wipe out the savings of a lifetime and push people who have no safety net to fall into deep poverty.

By contrast, properly compensation would not significantly dent the profits that the consortium stands to gain from the project. The expected revenues from the project are astronomical, if one compares them to the claims of those affected; some sources estimate total revenues after 30 years at 9 billion US$: O,5 billion US$ for Cameroon, 1,7 billion US$ for Chad, and no less than 6,8 billion US$ for the consortium.

Second, given all the problems the project has created in the communities along the pipeline route, it is difficult to see the World Bank as a credible institution that is able to steer a project of this magnitude to the desired outcome of poverty alleviation. If it declares that it was not aware of the problems, then it recognizes the failure of its mechanisms for project supervision. If it was aware but knowingly let these situations persist, then it has given up on its initial commitment to fight against poverty.

The failure of the social and environmental components of the project are directly attributable to the World Bank, which stated in 1998 that “We will not proceed with this project unless we are satisfied that our policies are respected, that the objective of poverty reduction can be met, and that the interests of the people of Chad and Cameroon are adequately protected”.

Third, the Chad Cameroon Oil Pipeline Project cannot be considered the model project that the Bank claimed it to be when it approved the project. Despite the unprecedented amount of safeguard policies, oversight committees, compensation plans, capacity building projects and mitigation measures added to it, there is so far no sign that the project is significantly different from any ordinary oil drilling or pipeline construction project going on elsewhere.

The project therefore can not be used as a blueprint for Bank operations in the oil sector elsewhere, like in the Central Asian region where it intends to becomes one of the major financiers of oil extraction projects.

The World Bank would do well to draw its conclusions from the unfolding failure of the Chad-Cameroon Oil Pipeline Project, and acknowledge that if even its model project cannot deliver on poverty reduction, it should better withdraw from the financing of oil projects altogether.

Project together with Friends of the Earth International
Vrije Keyser: working with footage from non-professional filmmakers, camera, script, editing, interviews, training for non-experienced trainees