Petroleum industry in Chad

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A 2012 treemap of Chad's exports indicating the bulk of the country's exports are oil-related

Royal Dutch Shell. However, many challenges exist to Chad's petroleum industry including but not limited to corruption, internal conflict, and geography. Since Chad is landlocked, most of Chad's oil exports are transported out of the country by a pipeline that leads to the Cameroonian port city of Kribi. This pipeline, owned by a consortium
, has come under fire due to allegations of exploitation by international corruption watchdogs, and Chadian politicians. In addition, environmentalists have voiced their concerns over the pipeline's impact on the natural environment, citing several spills.

Background

Early exploitation

Oil exploration in Chad began in the 1950s while the country was still under

Chadian–Libyan conflict.[3]

Déby era

In 1990,

Exxon (operating in Chad as Esso), Chevron, and Petronas
, and formed into the Tchad Oil Transportation Company. The consortium was American led with Exxon and Chevron combined holding 65% of the stake in the deal, and the consortium promised an investment of $3.7 billion to drill Chad's oil wells and construct a pipeline from the country to Cameroon to export the resources. As agreed upon with the government, some of this money would go to poverty-reduction projects and developing Chad's infrastructure. Chad would receive about 12.5% of the profit made on each barrel exported.

In 2006, President Déby ordered Chevron and Petronas to immediately leave Chad for supposedly refusing to pay $450 million in taxes, leaving Exxon as the sole oil company from the original consortium left in the country. However, many viewed the expulsion as a method to make way for increased Chadian government involvement in the country's oil production or even to make room for Chinese oil companies with Chad recently having restored relations with Beijing.[5][6] Shortly after, Déby suspended three of his cabinet members including Mahmat Nasser Hassan, Chad's oil minister.[7]

In 2016, a Chadian court levied a $74 billion fine on Exxon, an amount seven times the size of Chad's economy, for allegedly failing to pay royalties.[8] The following year, Exxon settled the dispute and was able to keep its exploration permit.[9]

In 2023, the Chadian government nationalized all the assets and rights including hydrocarbon permits and exploration and production authorisations that belonged to a subsidiary of Exxon Mobil.[10]

Chinese activities

Chinese involvement in the Chadian economy began in 2006, shortly after

China National Petroleum Company entered a joint venture with the Chadian National Hydrocarbon Company to build an oil refinery north of N'djamena with plans to produce 20,000 barrels per day. In addition, the refinery also included a petroleum college and maintains a training program for Chadian locals. Chinese oilmen also began to explore new oil fields and conduct seismic studies and in 2009, exploitation of a new oil field began.[11]

In 2014, Chad suspended China National Petroleum Corporation from exploration for environmental infractions and issued a fine of $1.2 billion. The same year the Chadian government announced its intention to substantially increase oil production in the country from around 100,000 bpd to 260,000 bpd by the end of 2016.[12]

Pipeline

Main article: Chad–Cameroon Petroleum Development and Pipeline Project

Construction of a pipeline from

non-governmental organizations (NGO) opposed the loan, pointing to Chad's human rights record and rampant corruption.[14]

The 660-mile (1,090 km) long pipeline was completed in 2003 and connected three oil fields in southern Chad with a floating production storage and offloading vessel located in the Atlantic, off the coast of Cameroon, near the town of Kribi.[15] Completed a year ahead of schedule, it created 13,000 jobs in Chad and led to over $400 million in infrastructure improvements.[16][17] However, in Cameroon, where the majority of the pipeline is located, NGOs have cited several oil spills as being harmful to local communities and have lambasted government officials for not doing more to prevent them.[18]

In 2008, the World Bank ended its involvement in the pipeline after Chad finished repaying its loan, specifying the government's failure to redirect revenue from the project to the earlier agreed upon goals of reducing poverty and developing infrastructure. In a statement the Bank said, “Chad failed to comply with the key requirements of this agreement. The government did not allocate adequate resources critical for poverty reduction.”[19]

Impact on Chad

Chadian society

Only a small segment of the Chadian population benefits from the oil industry with most of the population still reliant on agriculture, livestock, and fishing for subsistence, with cotton being the primary cash crop. The onset of oil production in the country has, in many cases, actually had a negative impact on other sectors of the economy with many households losing long-held agricultural and grazing lands to foreign oil corporations in exchange for meager compensation. In the Lake Chad area, a region considered to be a regional heartland for agricultural and fishing, oil wells and the construction of a new refinery have limited everyday Chadians from using the area to their economic benefit.[20] Chad continues to be among the poorest nations in the world with levels of poverty well below average, even for sub-Saharan Africa.[20]

Misuse of oil revenue

Oil production in Chad has led a significant windfall of money for the country's government, much of which has disappeared due to corruption or been used to purchase military weapons and fund conflict. In 2006, after the World Bank froze Chad's oil revenue account over the country's failure to use the money for development, Déby told a French newspaper, "We are going to buy weapons. We're going to do it openly."[21] The Justice and Equality Movement, a Sudanese opposition group active in the Darfur region has been financed using Chadian oil money.[22] A great deal of Chadian petroleum revenue has also been siphoned off through corruption, notably to members of Déby's Zaghawa clan, and his supporters through bloated infrastructure projects and other development plans.[23]

Production areas

Doba Basin

The

Exxon-Mobil.[24] The oil in this region is heavy and sour.[25]

Doseo Basin

Djermaya oil refinery in Chad.

The Doseo Basin is located east of the Doba Basin and west of the Salamat Basin, and is also a part of the Central African Rift system. It is 480 kilometers long and 90 kilometers wide and has a smaller ratio of sulfur content than in the neighboring Doba Basin.[26]

Salamat Basin

Located in the lowlands in eastern Chad and parts of the Central African Republic, the Salamat Basin is a less significant oil-producing area that is classified as a transtensional formation.[27] Block H, a compilation of 79 fault blocks, being exploited by CNPC is located in the Salamat Basin.[28]

Lake Chad

Oil was discovered in the Lake Chad Basin, an area bordering Nigeria, in the 1990s.[29] By the end of 2008, exploitation in the area amounted to 7.5 million tonnes a year.[30] However violence in the area is frequent due to fighting spilling over from nearby Nigeria.[31]

See also

References

  1. ISBN 978-1-351-92659-1
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  2. ISBN 978-1-912234-22-6
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  3. ^
    ISBN 978-1-78238-036-8
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  4. ISBN 978-0-7864-7084-6
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  5. ^ "Chad oil company deadline expires". BBC News. 2006-08-28. Retrieved 2018-02-05.
  6. ^ Nako, Madjiasra (2006-08-27). "Chad Plans to Evict 2 Oil Firms Over Unpaid Taxes". Washington Post. Retrieved 2018-02-05.
  7. ^ "Chad Suspends Ministers Over Oil Deals". Los Angeles Times. 2006-08-28. Retrieved 2018-02-05.
  8. ^ "Exxon in negotiations with Chad over record $74 billion fine: Bloomber". U.S. 2016-11-15. Retrieved 2018-02-05.
  9. ^ Nadjitan, Daniel N'Doh (2017-06-09). "Exxon Settles Dispute With Chad, Avoiding $74 Billion Fine". Bloomberg.com. Retrieved 2018-02-05.
  10. ^ "Chad says it has nationalized all assets owned by Exxon Mobil". Reuters. 2023-03-23. Retrieved 2023-03-24.
  11. ^ Pike, John (2018-02-05). "Chad". China Relations. Retrieved 2018-02-05.
  12. ^ "Chad to double oil output by 2016, develop minerals -minister". U.S. 2014-10-07. Retrieved 2018-02-05.
  13. ISBN 978-0-253-01987-5
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  14. ^ "Chad-Cameroon Pipeline Case Study". Columbia University in the City of New York. Retrieved 2018-02-05.
  15. ISBN 978-0-7679-1697-4
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  16. ^ "Chad-Cameroon Pipeline - Project Description". World Bank Group. 2010-08-18. Retrieved 2018-02-05.
  17. ^ "Chad-Cameroon Pipeline Project". ifc.org. 2015-03-10. Retrieved 2018-02-05.
  18. ^ "Archived copy" (PDF). www.relufa.org. Archived from the original (PDF) on 22 February 2014. Retrieved 13 January 2022.{{cite web}}: CS1 maint: archived copy as title (link)
  19. ^ Polgreen, Lydia (2008-09-11). "World Bank Ends Effort to Help Chad Ease Poverty". The New York Times. Retrieved 2018-02-05.
  20. ^ a b Achille Toto Same (2008). Windfall Management for Poverty Reduction. World Bank Publications. pp. 5–. GGKEY:SR4Z5RQJ3X2.
  21. ^ "Chad 'needs oil money for arms'". BBC News. 2006-04-19. Retrieved 2018-02-05.
  22. ^ "Fix Chad to save Darfur". Los Angeles Times. 2008-04-29. Retrieved 2018-02-05.
  23. ^ Moncrieff, Richard (2017-09-27). "Chad: In Backing Chad, the West Faces Moral Hazards". allAfrica.com. Retrieved 2018-02-05.
  24. ^ "DOBA - UHIC". United Hydrocarbon International. Retrieved 2018-02-05.
  25. ^ Ghazvinian, John (2007-04-05). "When ExxonMobil Came to Chad". Slate Magazine. Retrieved 2018-02-05.
  26. ^ "Chad Prepares to Be an Oil Producer". Oil and Gas Online. Retrieved 2018-02-05.
  27. ISBN 9782901026341
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  28. ISBN 978-1-59370-164-2
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  29. ISBN 978-1-137-33972-0
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  30. ISBN 978-1-4443-9005-6
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  31. ^ "Nigeria to continue oil exploration in Lake Chad Basin despite kidnapp". U.S. 2017-07-31. Retrieved 2018-02-05.
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