Chad-Cameroon Oil Pipeline Essay Example for Free

Chad-Cameroon Oil Pipeline EssayAlthough significant crude oil reserves have been found in the early 1970s, these could non be developed because 1- Chad is a landlocked country with limited domestic demand 2- complaisant war prevented the entry of a stable investment purlieu and caused the departure of several investors. Since peace was established in 1990, investors and the innovation Bank returned to Chad for developing its oil reserves.In order to justify the large investment, access to the serviceman market was sought via a pipeline through Cameroon, which is also a relatively silly country that can benefit from the investment and transit revenues. The World Bank has been supporting essential resource extraction based development around the world and, in particular, in Africa as the primary driver for economic growth and poverty reduction in these countries. But, the Bank has also been heavily criticized for failing to achieve these goals as the revenues from resou rce development do not spend a penny the majority of the society.With the Chad-Cameroon pipeline and oil development in Chad, the Bank and the companies are following a novel partnership and revenue management approach. How is the project backing different? How will this new approach work? Will Chad and Cameroon benefit from this approach? Background1 Upon getting its independence from France in 1960, Chad has been involved in 30 age of civil war. The peace was finally restored in 1990, and the country drifted towards multiparty democracy, until rebellion broke out again in the north of the country.In January 2002 peace treaty was write confirming de jure reign of northern ethnicity. Chad is one of the least developed nations on earth with GNI per capita of around $200. Republic of Chad is ranked 165th of 175 countries in UNs Survival Ranking. The agricultural sector accounts for 36% of Chads GDP. Cotton exports account for 50% of foreign currency earnings. Chads government is c oncerned about this dependence on cotton and wants to diversify its economy in order to mitigate vulnerability associated with volatility of the international price of cotton.Chads only significant intrinsic resources are oil deposits. Being independent since 1960, Cameroon has developed a rather stable political system, based on ethnic oligopoly. Despite of vast natural resource base (including oil, natural gas and aluminum) the country is one of the poorest in the world, with GNI per capita of roughly $600 in 2002. According to World Bank classification Cameroon is an HIPC (heavily indebted poor country) with total debt of $4. 9 billion and outstanding short-term debt over $950 million.Cameroon is in Top-15 countries with highest HIV rate (around 12%) and in Top-30 infant mortality rate. Economic and societal development information on this section comes from the World Bank web site, CIA Fact Book, and U. N. Human Development Report. Center for Energy Economics. No reproduction , distribution or attribution without permission. Chad-Cameroon Pipeline 1 1 Case Study From Since 1990, being faced with a fall in GDP due to unfavorable prices on major exported goods Cameroon has been engaged in several World Bank and IMF programs, aimed at poverty reduction and acceleration of economic growth.As a result yearbook GDP growth averaged 2. 1% through 1990-2001, compared to 3. 4% in 1980s. Oil Development Conoco became the first foreign oil company to undertake significant oil exploration in Chad with acquisition of the Chad Permit H concession in 1969. Between 1973 and 1975, oil was discovered in varying amounts in the Doba, Doseo, and Lake Chad basins, that led to the creation of a multinational consortium comprising Conoco (12. 5% and operator), Royal Dutch/Shell (37. 5%), Exxon (25%), and Chevron (25%).In 1981 all the exploration projects were stopped due to escalating civil war. In 1988 a convention was signed between the government of Chad and the consortium, granting exploration permit with term of validity until early 2004. Conoco withdrew from the project, and Exxon took over operations, discovering the Bolobo field in 1989 with estimated cxxxv million barrels of reserves. 3 Chevron, in its turn, sold its share (20% interest in the Block H hydrocarbon license containing the three fields) to Elf Aquitaine, in 1993.