Home
| Campaigns |
International | International
Financial Institutions | Case Studies and
Resources | Chad-Cameroon Oil Pipeline
|
Description
of the Project
The
Exxon-Shell pipeline project in Chad and Cameroon, West Africa,
is the largest construction project in sub-Saharan Africa. When
completed it will produce 225,000 barrels of oil per day. The pipeline
is expected to operate for 25-30 years. The project consists of
three parts: *Development
of oil fields in the Doba region in southern Chad. This will require
the use of 565 ha (1400 acres) of land for the boring of 594 oil
wells, the construction of a treatment center, a pumping station,
a residential area with 2000 houses, a drilling base, an airport,
and 58 km (36 miles) of roads. *Construction of an offshore marine export terminal facility 15 km off the coast of Cameroon and associated marine pipelines. The
consortium of oil companies financing the project is made up of
Exxon (40%), Shell (40%) and Elf (20%) and is led by Exxon. The
Governments of Chad and Cameroon participate in joint ventures created
with the consortium to manage the construction of the pipeline,
not the development of oil fields. The estimated cost of the project
is $3.5 billion, which is 20 times the budget of Chad. The Governments of Chad and Cameroon have asked the World Bank for US $115 million loans from IBRD that would cover a 15 percent share in the two joint ventures managing the pipeline construction. The International Finance Corporation (IFC) is considering a $250 million loan to the oil companies and would mobilize an additional $1 billion on the private market in limited recourse debt. Exxon has said that World Bank's financial participation in the project is a prerequisite for going forward. The World Bank's financial backing would enable the companies to attract investors, allow access to lower interest loans and raise the project budget needed. Social
and Environmental Concerns The
pipeline first proposed route used to pass through or close to important
ecological areas that are home to indigenous tribes and endangered
species. In response to the objections raised by environmentalists
and the World Bank, the consortium has changed the routing of the
pipeline. However, the project still gives rise to significant environmental
and social concerns: The
existing agreement between the consortium and Chad allows for oil
exploration not only in the Doba region, but in four other regions
(Lake Chad, Salamat, Bongor and Doseo) covering a surface area of
104,223.5 square kilometers. The proposed pipeline, whose capacity
exceeds the oil flow that can be provided by the Doba fields, could
be the first step of further oil development projects in the region.
However a comprehensive social and environmental impact assessment
covering all potential developments has never been produced. Risk
of oil spills which contaminate the groundwater system. Even if
the best available technology is adopted, 2,000 gallons could leak
per day without being detected. The pipeline traverses several major
rivers and would lead to severe pollution problems. Teh consortium
has still not completed and released an emergency oil spill management
program. Upgrading
of existing seasonal roads is likely to lead to illegal poaching
and logging in areas that would otherwise be inaccessible. The development
of construction sites will take farm land needed for subsistence
agriculture from local villages, but compensation so far has been
determined unilaterally by either the government or the consortium
at very low rates. Also, the operation of the pipeline and the influx
of people attracted by the prospect of job opportunities and economic
growth will disrupt the social life and traditions of rural farmers
and will pose public health risks related to the spread of sexually
transmissible diseases. Poor environmental record of Shell and Exxon in their overseas operations. Shell's activity in Nigeria has been widely criticized for its disastrous environmental impact on the Niger Delta ecosystems and for repeated human rights violations. Between 1982 and 1992 Shell's subsidiary in Nigeria spilled about 1.6 million gallons of oil in the Niger Delta, most from leaking pipelines, causing high level of water pollution and the death of fish, mangroves and tropical forests. In 1997 the Wall Street Journal reported Exxon's chairman as advising to developing countries to avoid environmental controls otherwise they would lose foreign investment. Political
Instability and Human Rights Violations An
ambitious project like the Chad-Cameroon pipeline that will operate
for 25 years requires some degree of political stability. Instead,
Chad presents a very unstable situation that is likely to be worsened
by the prospects of revenues from oil exploitation. After a thirty
year civil war, the south of Chad is still the theater of violence
and struggle. In October 1997 riots in the region led to the massacre
of 80 unarmed civilians by Chadian security forces, which are mainly
recruited among the President's ethnic group. This was followed
by the killing of 100 unarmed civilians in March 1998, according
to Amnesty International. More recently, opposition Parliamentarian
Yorongar Ngarleyji was jailed for several months for criticizing
the project. The violence and civil unrest forced the United States
to withdraw all its Peace Corps volunteers from Chad in April 1998.
It is unclear how the pipeline could be built, managed and maintained
in this context of violence and instability. In such political instability,
acts of sabotage are more likely, which would cause disastrous environmental
and economic consequences. As far as Cameroon is concerned, the US State Department' annual report on Human Rights states that "Cameroon's human rights record continued to be poor, and the Government continued to commit numerous and serious human rights abuses." Private press is subject to heavy censorship and freedom of assembly and association is often restricted in practice. These violations of individual freedoms cast a shadow on the credibility of consultation processes where people were allegedly allowed to freely express their concerns about the pipeline. Failure
to Address Poverty Alleviation While Exxon claims that benefits for Chad and Cameroon will amount to $8.5 billion and $900 million respectively, there is no evidence that profits from the pipeline will be invested in projects aimed at development or poverty alleviation. In fact, experience in neighboring African countries, such as Nigeria and Congo, proves otherwise. A 1995 World Bank report questioned the willingness of the Government of Cameroon to address the issue of poverty and criticized its financial management. Profits from oil exploitation are largely unaccounted for in Cameroon. The Government of Chad also has financial management problems which has led donor countries to require the Chad Treasury to be under the control of a Swiss firm. It is a risky venture to expect the revenues generated by the oil project to be reinvested in poverty alleviation programs, health care and education given the record in both countries. Even more, if the World Bank supports this project, it will crowd out its ability to support other projects that are more directly tied to poverty alleviation since each country has a limit to what it can borrow from the Bank. Lack
of Participation and Consultation with Affected People Friends of the Earth Netherlands commissioned field research on consultation of local and indigenous people by the consortium in the Lolodorf-Kribi area, the last section of the pipeline's path. The research team found that information given by the consortium on environmental impacts of the pipeline was limited to damage to crops, with no mention of damages to wild flora and fauna, possible contamination of ground and surface water and other damages caused by oil spills. This means that pygmies and farmers contacted by the consortium were not informed of the environmental impacts acknowledged in both EMP and EA. Compensation for damages already caused by preliminary works was determined unilaterally by the companies and was limited to those natural resources that have a commercial value. The report concluded that the "timing, set up and tenor of the consultation process led...to the conclusion that the consortium did not solicit the views and concerns of affected groups" in the area where research took place. The
World Bank Supporting Corporate Welfare The World Bank is using finite public resources to enrich large corporations instead of helping the poor. Although earmarked for sustainable development and poverty relief, 9 out of 10 World Bank fossil fuel projects benefit transnational corporations based in the wealthy countries. The Exxon-Shell Pipeline Project is no exception. As the largest oil company in the world, Exxon's 1996 annual profits are four times the budget of Cameroon and 40 times the budget of Chad. The disproportion between giant companies like Exxon, Shell and Elf and two of the poorest countries in the world makes it hard to believe that the people of Chad and Cameroon will be the beneficiaries of this project. Instead, the Exxon-Shell pipeline will divert World Bank money from much needed health, education and poverty alleviation projects. Since World Bank funding for each country is limited, whatever is spent for the Exxon-Shell pipeline will not be available for social and environmental projects.
|
|
