(THE INDIAN OCEAN NEWSLETTER #898 - 01/04/2000)

 

              DJIBOUTI : New alert for Total

 The Djibouti authorities often throw a spanner in  the works of some French company operating in Djibouti when they want to  express their discontent with Paris. Latest victim is Total Djibouti,  local subsidiary of the French oil major. Relations between the Djibouti  government and the three international oil companies (Mobil Oil, Shell, Total) sharing the Djibouti distribution market (130,000 tons in 1999)  are already pretty poor because of taxes or unpaid government bills. In one example, state-owned Electricité de Djibouti (EDD) still owes Shell  800 million Djibouti francs (US$1 = 177 DF).

There's also conflict over the tax of $1 per cu.m of petroleum products the Djibouti authorities slapped on imports  transiting to Ethiopia (ION 859) since importers cannot pass it on in selling prices. In Total's case, there is also blackmail by the authorities: they have ordered the French to decide between remaining in Djibouti or remaining in neighbouring Somaliland (where Total has a fuel depot).

Djibouti head of state Ismail Omar Gelleh hopes to kill two birds with one stone: display his anger with Paris and penalize the Somaliland authorities for refusing to participate in a peace conference he hopes to organize in Djibouti at the end of April.  

In this context, the project to build an oil refinery in Djibouti has resurfaced. It was put forward in 1989 then buried (ION 655 and 717), but has well-placed allies as Fahmy Ahmed El Haq, one of its earlier supporters (ION 862), is now adviser to the president for promoting investments. According to ION's sister publication Africa Energy and Mining, the project is now led by Italian energy major ENI (AGIP group) backed by Gulf financial interests. But ENI, anxious to get Total out of the region, conditions giving its backing on its taking Total's place on Djibouti's petroleum distribution market. 

I.O.N. - In part the project has reappeared because of the need, for security reasons, to shift the three companies'  fuel depots to Dorale, 10 km from the capital and on the sea. The idea  of building an oil pipeline from Dorale to supply the Ethiopian market apparently first germed in the brain of  saudi-Ethiopian businessman Mohamed Hussein Al Amoudi. And the refinery project went back on the table at the same time. When Gelleh was on an official visit to France in May last year (ION 858), he asked French parastatal Technip to carry out a feasibility study, but after an optimistic preliminary report,Technip questioned oil industry experts on the spot and got very  different data (primarily, quality of the crude to be refined) that caused it to supply a much more qualified report. For one thing, at a conservative estimate, it would cost at least $400 million and maybe twice to add an oil pipeline. Only the regional market (primarily the Ethiopian one, 1,000,000 tons in 1999), and not just the Djibouti market, could justify all the infrastructure.

THE INDIAN OCEAN NEWSLETTER #898 - 01/04/2000)