Oil pipeline faces blockage.


Work on the construction of a 1,100km pipe-line between the Doba Basin oil fields in southern Chad and the port of Kribi in Cameroon should be well underway by the end of this year. However, the project, which could bring massive returns to both countries, has sparked off a heated outcry from both local populations and Western environmentalists.

By the year 2001, a consortium composed of Exxon (40% of the shares), Shell (40%) and Elf (20%), should start producing initially up to 150,000 barrels per day progressing to 250,000 b/d later from the oil fields of the Doba basin in the south-west of Chad. Total reserves are estimated at some 900m barrels.

The estimated cost of the entire project, including the construction of the 1,100km pipeline to the Cameroonian port of Kribi, amounts to $3,500m. The price-tag on the actual pipe-line is estimated at $1,800m. So far, the International Development Agency (IDA) has agreed to provide up to $ 120m as a loan to Cameroon and Chad for the pipe-line project, and another World Bank subsidiary, the IFC, is considering lending $250m more for the same project to the Exxon-Shell-Elf consortium.

Overall the Doba project is expected to generate total revenues of $20,000bn at current oil prices, excluding costs. Labour for the construction of the pipe-line would also provide employment for 2,000 Chadian and Cameroonian workers, as well as some 600 truck drivers, says a World Bank source.

The Chadian state is to get $5bn in royalties, fees and taxes, which represents nearly double the country's current GNP. In addition, the consortium believes that indirect benefits for the country may amount to $3.5bn. As African Business was going to press, the consortium was also offering the Chadian government the opportunity to participate in the construction of both a refinery and an electricity-from-oil thermal power station at Sedigi, as reward for a tax-friendly attitude.

Cameroon meanwhile expects to receive $0.4p/b in transit rights, which could represent a maximum annual revenue of $37m, on top of its 15% share of the profits of the Cameroon Oil Transport Company (COTCO) in charge of management and maintenance of the pipe-line. Estimates of the total benefits for Cameroon including transit fees range between $800m and $1,000m.

US-French contest

Companies are competing hard to get contracts. The American company Bechtel and French Spie Capag seem to have taken the lead as regards the pipe-line construction contract...

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