- Title: [SW News](Reuters) African nations back controversial Chad oil project
- Date: 6 February, 2000
February 6, 2000
African nations back controversial Chad oil project
N'DJAMENA, Chad (Reuters) - A regional bloc of African states has thrown its weight behind
a controversial oil extraction and pipeline project in Chad which environmentalists
oppose.
The 11-strong Community of Sahelian-Saharan States (CED-SAD) adopted a resolution backing
the project at a two-day meeting in the country's capital N'Djamena which ended on
Saturday evening.
The $3.5 billion project aims to develop 300 oil wells near Doba in the south of the
impoverished, landlocked country.
It is expected to bring onstream between 200,000 and 250,000 barrels of oil per day in
2001, extracting the oil and transporting it via a 1,050 km (650-mile) pipeline to a
terminal at the Cameroon port of Kribi on the Gulf of Guinea.
Environmentalists have long opposed the construction of the connecting oilfields because
of the environmental and social costs of building the enormous pipeline through untouched
rainforest.
The CED-SAD's 11 members are Libya, Burkina Faso, Chad, Mali, Niger, Sudan, Central
African Republic, Eritrea, Djibouti, Senegal and Gambia.
The oil project has been suspended since November, when Chad's government said partners
Elf Aquitaine and Royal Dutch/Shell had pulled out.
Chad's ATP news agency said in December that Elf and Shell were both still interested in
the scheme, led by Exxon-Mobil , and Shell confirmed that its negotiations were
continuing.
However, industry sources said last week that Malaysia's state oil firm Petronas was set
to buy a 35 percent stake of the production side of the project by the end of February,
with U.S. oil giant Chevron Corp taking 25 percent and Exxon Mobil keeping its 40 percent
holding.
The sources said Petronas and Chevron were buying the stakes from Shell, which held a
40-percent stake, and Elf, which held 20 percent.
Despite environmental opposition, the pipeline project is being backed by a World Bank
loan of $90 million at preferential rates to finance the two countries' equity stakes. The
Cameroon government will take up $55 million and Chad will take up $35 million.
Work on the development was to have begun in 2000.
The project estimates it can yield 900 million barrels of oil over 15 to 20 years.
The World Bank's private sector arm, the IFC, is to finance a $100 million loan to the
companies in the consortium and plans to mobilize a further $300 million in loans from
commercial banks. The remaining funds are to be shouldered by the consortium.
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