The World Bank Group’s participation in the petrol project that would generate revenues for Chad’s poverty reduction was approved in June 2000. The project entails developing oil fields in southern Chad, building a pipeline across Cameroon to the Atlantic coast, and installing an off-shore terminal.
The oil development project extracts and carries oil from three oil fields (Miandoum, Kome and Bolobo) in the Doba basin in southern Chad to off-loading facilities off the coast of Cameroon. The construction phase comprised:
Drilling some three hundred wells in fields in southwestern Chad that hold about 900 million barrels of oil;
Building a 1070km (650-mile) buried pipeline from the fields across Cameroon to the coast;
Installing an off-shore terminal facility - a "floating storage and off-loading" vessel with associated marine pipelines.
Construction of the pipeline took three years and was completed a year ahead of schedule. Petroleum production is expected to last about 25 years.
Drilling is financed and carried out by Exxon, the operator, on behalf of a 3-member oil consortium including Petronas of Malaysia, and Chevron of the U.S. By the end of 2004, 226 wells had been drilled. By September 30, 2005, about 118 million barrels of oil were produced.
The pipeline itself is owned and operated by two joint-venture companies supported by World Bank financing: one in Cameroon (Cameroon Oil Transportation Company-COTCO) and the other for the portion in Chad (Tchad Oil Transportation Company-TOTCO). The oil consortium jointly holds about 80 percent of the shares of the pipeline companies. The government of Chad holds minority interests in both pipeline companies while the government of Cameroon holds a minority interest in the Cameroon pipeline company. The governments of both countries receive revenues from these holdings (financed through about US$90 million in loans from the World Bank) and through royalties (to Chad), transit fees (to Cameroon), and taxes (to both governments).
Total project costs are estimated at $4.1 billion. The private sponsors financed about $3.5 billion or nearly 85 percent of the costs. The European Investment Bank financed about 1percent of the project costs.
The World Bank Group participated in the project by providing IBRD loans of
- $39.5 million to Chad to finance its minority holdings in TOTCO and COTCO, and
- $53.4 million to Cameroon to finance its minority holdings in COTCO .
IFC loaned $100 million each to TOTCO and COTCO in A loans and mobilized an additional $100 million each in B loans. (See Private Sector Development).
See the Petroleum Development and Pipeline Project Documentation for more details.