Chad: The Tip of the Spear: A Revolution Is Taking Place in the Dust Bowls of Southern Chad, One That Will Have a Profound Impact on How African Countries Do Business with the Major Oil Companies in the Future. If the Chad 'Experiment' Works, It Could Usher in a New Era in the Use of Africa's Natural Resources

By Vesely, Milan | African Business, October 2003 | Go to article overview

Chad: The Tip of the Spear: A Revolution Is Taking Place in the Dust Bowls of Southern Chad, One That Will Have a Profound Impact on How African Countries Do Business with the Major Oil Companies in the Future. If the Chad 'Experiment' Works, It Could Usher in a New Era in the Use of Africa's Natural Resources


Vesely, Milan, African Business


Chad's annual revenues are about to take a quantum leap upwards. Thanks to the newly discovered oil reserves at the Miandoum oil field the country will have a net surplus for the first time in its history; something unthinkable only two years ago. How it spends its new found wealth is therefore the subject of intense interest to the people of Chad, to the World Bank and to a Bush administration seeking new sources of energy as well as a toehold in the predominantly Muslim Sahara.

The question being asked by observers is: Will Chad use the money earned from its natural resources on development projects such as schools, clinics and roads; or will the money end up in the politicians' secret bank accounts as has happened in Nigeria and Angola. The Chad-Cameroon Petroleum Development and Pipeline Project is a mammoth undertaking by any standards. Crude oil from Miandoum I is set to flow 663 miles to new storage tanks anchored in the Atlantic Ocean off the Cameroon coast.

Originating at the well head at Kome, Chad, the pipeline snakes its way over parched desert, through crocodile-infested rivers, and finally cuts across the tropical forests of the Bakola pygmies before emerging in the Gulf of Guinea for onward shipment to US refineries.

In the process the oil will give America a say in how Chad runs its national finances. If the move succeeds, it will forever revolutionise the way American companies do business in Africa in the future; the Chad experiment is the 'point of the spear', as Bush administration officials like to describe it. Critics on the other hand charge that it's just financial colonization directed from Washington through the proxy of major oil companies.

Under the proposed agreement, how Chad receives and spends its citizens' resources will become instantly transparent once the first shipment of crude oil is loaded onto tankers bound for US and European ports. For the first time ever, an African nation has agreed to surrender part of its sovereignty over how to spend the money earned by a foreign company exploiting the country's oil reserves through pressure brought about by the World Bank, the United States government and major oil companies, all acting in unison.

Under the new arrangement the American administration will in fact have de facto control over Chad's politics and finances. This will give the US administration tremendous power. Displease Washington as an African leader and you are liable to feel the financial squeeze, toe the American administration's line and the money will keep flowing into your national coffers that is the premise.

In the southern city of Kome, an Exxon Mobile Corp-led consortium is pressing ahead on Africa's most ambitious private investment project; the $3.5bn oil exploitation venture designed to tap into the one-billion barrel Miandoum I oil field. Massive trucks and high-rise drilling equipment are constantly on the move, the air thick with the chocking dust raised by their massive Firestone tires. It's like the annual 'Hamoud' monsoon, managers explain, only this time the activities are all designed to fill Chad's meager coffers with an annual injection of up to $100m American dollars.

The Miandoum I project dates back to 1974 when an initial pilot well proved the existence of considerable reserves. Promising, but not spectacular, the project was shelved until 1994 when Exxon and its prospecting partners determined that reserves of at least one million barrels of crude lay under the desert sands, the magic number that suddenly gets oil executives hot under the collar. But the problem was how to transport the crude to a shipment point for overseas markets.

Exxon had the experience to build pipelines but even to them the Chad/Cameroon terrain was daunting. Chad's social problems added an additional risk, a risk too great to take until France's TotalFinaElf and the Royal Dutch Shell group agreed to shoulder some of the burden. …

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