World Bank Completes Chad Oil Study, Waits for Consortium
11/12/99
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Title: World Bank completes Chad oil study, waits for consortium
Source: Reuters
Status: Copyright 1999, contact source for permission to reprint
Date: November 12, 1999
NEW YORK - The World Bank has completed its review of the $3.5
billion Chad-Cameroon crude oil pipeline, but officials said they are
waiting for a resolution to the latest hitch in the ill-starred
project before presenting the report to the Bank's board.
The Chadian government said late Tuesday that France's Elf Aquitaine
and Anglo-Dutch oil major Royal Dutch/Shell - two of the three oil
companies in the project - had pulled out unexpectedly, the latest in
a series of setbacks. World Bank approval for the project has already
been delayed because of environmental concerns.
U.S. oil major Exxon Corp. is the third company in the consortium to
fund the project to build a 1,050 km (650-mile) oil pipeline from
southern Chad to the port of Kribi in western Cameroon. Exxon and
Shell were originally to have a 40 percent interest in the project
while Elf was to have a 20 percent stake.
A World Bank official said the bank was now awaiting a resolution of
the consortium problem before presenting the report.
"We have completed our review of environmental, social and revenue
management of the project," Richard Uku, a World Bank spokesman,
said. "As soon as the work related to the recomposition of the
consortium is complete, we will present it to the board."
The board briefing, at which the funding for the project will be
presented for approval, was originally scheduled for this month.
The proposed funding includes a World Bank loan of $90 million at
preferential rates to finance the two countries' equity shares in the
pipeline project. Most of that, $55 million, will go to Cameroon's
government and $35 million will go to Chad. 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 mobilise a further $300
million in loans from commercial banks. The remaining funds are to be
shouldered by the corporate consortium.
Environmentalists have long opposed the construction of the
connecting oilfields in Doba, southern Chad, because of the
environmental and social costs of building the enormous pipeline
through untouched rainforest.
Some environmentalists said the pressure on international oil
companies to pay closer attention to human rights and environmental
issues may have prompted the surprise move, at least for Shell.
"The tide has turned on them big time in Nigeria, in terms of being
able to get what they want," said Danny Kennedy, of Project
Underground, a U.S.-based environmental group that focuses on the
mining and oil industries. "I think they would be conscious of it (in
Chad and Cameroon), but they want to see what it is worth to them,"
Kennedy said.
But other environmental groups said they felt economics had driven
the corporate reshuffle.
"There is absolutely no indication that social considerations or
environmental considerations are in any way affecting the decision by
either Elf or Shell," said Lisa Jordan, executive director at the
Bank Information Centre, an independent, non-profit agency that
tracks the projects and policies of the World Bank. "It's more of an
economic issue," she said.