News - 22 October 2012

en - Oil exploitation in Chad and the local population

By Begoña Iñarra

Chad’s petroleum project stirred up so many hopes for the country’s development, but now, after 8 years in operation, it has become a nightmare. The exploitation of oil has destroyed the local farmers’ production system, depriving them of their living; it is polluting the water, soil and air; it is dividing the people and sowing despair, especially among the young. My visit there allowed me to see its consequences with my own eyes. For the pastoral workers I was with, and for myself, the reality turned out to be far worse than envisaged.
From 2004 to 2011, the State’s budget increased from at least 300 billion CFA to more than 1,572,482 billion, but the advantages of this manna are not benefiting the people. Neither the conditions of life of the 11 million Chadians nor the public services have improved. The promises made by companies and by the government have not been kept and the World Bank left the country in 2008.
Currently, the government is establishing questionable contracts with other mining companies from China, Taiwan etc. There is also prospecting for gold and uranium – and digging for uranium is far more dangerous than for oil.

Petroleum, a controversial project

Chad’s oil exploitation, financed by the World Bank, has been controversial since the planning stages and is even more so now that it is in operation. Opponents foresaw that, with Chad being one of the five most corrupt countries in the world, the people were not going to benefit from the income oil would bring in; it would only suffer its downsides. Those who favoured the scheme put their trust in the promises of the government, the operating company and the World Bank who all affirmed that oil would be the answer to the country’s poverty.
To receive World Bank finance for the project, the government committed itself to allocating 70% of the income from oil to the reduction of poverty. 5% was for developing the southern part of the country. The World Bank claimed the Chad oil project was to be a model of how natural resources could help eradicate poverty and benefit the population.
After 8 years of exploitation, the results are even worse than foreseen. The poverty in the country has intensified, especially in the petroleum zone. In 2011, Chad was the 7th poorest country in the world . The mostly rural Eastern Logone region which includes the Doba oil basin was very productive and the home of 38% of the population. It is now the 3rd poorest region in Chad in spite of the thousands of barrels of oil exported daily. 64.7% of the people there live in poverty with an average income of 396 CFA, about 0.56 Euro per person per day. The farmers of the Doba basin are the greatest losers from the oil project.

Oil production

Oil production in the southern Doba Basin began in 2003. The oil is transported from there to the Atlantic port of Kibri in Cameroon by a 1,070 km long pipeline (of which 205 km are in Chad). The 3 main deposits (Doba-Komé, Miandoum and Bolobo) total 900,000 barrels and more than 1000 oil wells (the contract estimated 300) pump out the oil - and the number continues to increase. The country’s total reserves [Moundouli, Nya (in the South) & Sidigui and Bongor (Lake Chad)] exceed 2,000 million barrels. The ESSO Consortium – formed by ExxonMobil and Chevron from the US and Petronas from Malaysia – is responsible for the exploitation and exporting of the petroleum. The quality and quantity produced, the basis of fees paid to the country, is controlled only by ESSO. Chad has neither the will nor the means to check the figures. However, the country could get hold of the technicians and technology to do this.
ESSO hides behind contract confidentiality to feed a corrupt system that prevents a proper check of the oil profits. Chad signed its candidacy for the Extractive Industries Transparency Initiative (EITI) in 2010, but has not yet reported.

Revenue from oil

The country began to see revenue from the oil in 2004, but the lack of transparency on the part of the administration and the Consortium makes it difficult to discover the totals collected by the government. The table below gives estimates of the income for Chad and the oil companies from 2004 to 2007 given an estimated average production of 120.000 barrels per day:

Sources of income 2004 – 2007
Chad (income in dollars)  Consortium (income in dollars)
Royalties and dividends  1,007,468,161  7,052,277,127
Tax on corporate income  1,304,220,935  1,304,220,935
TOTAL  2,311,689,096  5,748,054,192

The lack of control of the project’s operational costs and of the quantity exported is reducing the share of royalties going to Chad which receives only 28.69% of the profits while ESSO receives 71.31%. Between 2004 and 2008, because of rising oil prices, Chad’s income was more than $4.3 billion . This enabled it to repay its debt to the World Bank in 2008 thus inducing the Bank to withdraw even though the country was not conforming to the requirements of the original agreement. The World Bank’s 2005 enquiry had revealed that the money had been wasted, citing poor quality equipment, inflated prices, schools and hospitals unfinished and not even equipped. The institution for monitoring and control of oil resources is very weak and slow. It is not independent and its opinion is often not respected.

The project’s impact on the population

1. The impact on agricultural production

Most of the villages in the Doba region used to enjoy good agricultural production. The families had a few cattle, carts, bikes and a sheet-metal roof over their heads. Today, prosperity is a distant memory and despair is growing in a region where the blessing of oil has turned into a curse. The more than 4000 families affected by the project have been abandoned to their sad fate.
The ESSO Consortium acquired more than 60% of the cultivable land in the zone for its installations which were far more numerous than anticipated. As well as taking up farmland, they are also reducing living space. Fields and oil infrastructure intermingle. In 25 villages, there are a total of 1,112 wells with all the accompanying installations! Whole populations have been displaced as the size of their fields no longer makes them productive; some villages remain like enclaves in the middle of the oil paraphernalia; sacred sites have been desecrated. Savanna, forests, marshes and land lying fallow for more than a year have been taken, without compensation. The people used to use these lands for complementary farming activities such as gathering mushrooms, fruits, honey, medicines, wood, hunting, fishing and grazing and there has been no support to help the people who can no longer live off their land to retrain.
As the farmers can no longer freely allow fields to lie fallow the land becomes exhausted and production goes down. In addition, their movements on their own land are restricted – they cannot go out at night because of the surveillance of the oil installations.
In spite of the many high tension cables that cross the region, the villages and small towns do not have electricity and even the large towns are often blacked out. Water lorries circulate continuously but the villages have no drinking water. The people have moved from poverty before the oil was found to misery now it is there. This is why indignation and despair reign in the enclave villages, especially among the young who can see no way out.

2. The impact on life

Oil is a poison which threatens the natural environment of the region and irreversibly taints the water, soil, farming, health, people, flora and fauna. The pipeline passes through fields, very close to villages and crosses several rivers used for fishing. In the dry season, the river beds are used for growing vegetables, rice and maize. The forest that lines the waterways is also under threat. Even worse, these waterways flow into the Pendé which later joins the Chari before flowing into Lake Chad and so risk spreading local contamination throughout a large part of the country.
This contamination is already present. Drainage canals from drilling sites and quarries are polluting the surface- and the ground-water that the local people draw on. Rivers and land have already been sullied by crude oil spills and pipeline ruptures. If it exists, compensation does not cover the losses. ESSO has no mechanisms for detecting accidental spillages and uses villagers, “walkers”, to detect and report leaks.
Quarries - huge pits dug for their minerals and for burying waste pollutants - are returned to farmers without being decontaminated and are infertile. Quarries that have not been closed off accumulate rainwater. This encourages mosquitoes, increases malaria and is a drowning hazard for animals and people.
The air is also contaminated by the flares that burn off excess gas and waste, causing illness in local villages. Plants are not producing their fruit. Farming income has gone down in areas close to these flares, even when there is good rainfall. High tension power cables are causing health problems.
The death rate among children and animals is going up. Acute anaemia, abortions and certain illnesses are to blame. Complaints filed in court have not been followed up because of official complicity with ESSO. 
The waste management plan and general guidelines for the project are not implemented. Mechanisms for the supervision and control of social and environmental aspects are weak or nonexistent.

The oil has helped to build some infrastructure (schools, hospitals, universities) in the country and improve the road network. But several of these infrastructures are not working and others are window-dressing that does not benefit the majority of Chadians.

3. Perversity of the compensation system  

Compensation is not transparent; it is inadequate and unjust; and it produces divisions within communities. As the land belongs to the state and the villagers only have the right of usage, ESSO does not give compensation for fields that have been cultivated or are being prepared, nor for lost harvests. In other words, there is no recompense for loss of land which would have been a resource for earning a living. Compensation covers farmers’ living expenses for a maximum of two or three years. Some of the money falls into the hands of the numerous intermediaries instead of the affected population. So this oil exploitation is a source of conflict and tension between local people, businesses and the government.
5% of the government’s direct oil revenue was supposed to go towards reducing the negative consequences of the project for the people living nearby. However, this money (€5.8 billion) has not reached the oil-producing Eastern Logone. Scarcely 3% of the 1027 villages there have benefited from the investments from this 5%. While some of the affected villages have not received anything, others (that are in the public eye but not affected) have done disproportionately well.
Because of the existence of this 5% for the region, the state has been concentrating its investments in other regions without much planning or thought about operational issues. This poor governance has led to wastage of the available funds. The new, poor quality infrastructure does not correspond to the needs of the poor. The commitment to allocating 70% of the oil income to the reduction of poverty remains a pipedream.

Signs of Hope

Faced with this lackluster situation for the people of the oil zone, several networks have emerged and have actively advocated improving the living conditions of these populations.
The Church is becoming aware of the problem and has decided to work alongside the people. The bishops of the oil zone have committed themselves to lobbying the government, the company and international institutions (EU, member countries, organisations). 
The creation of the Framework for Consultation and Dialogue Logone (Cadre de Concertation et de Dialogue du Logone [CCDL])will strengthen the initiative existing networks, and intends to undertake a frank and responsible dialogue with Esso-Chad around issues of compensation, land restoration, land loss, fundamental freedoms and security, environmental degradation, etc.. affecting populations of the oil zone.

Begoña Iñarra is the Secretary executive Africa-Europe Faith and Justice Network (AEFJN)

Oil exploitation in Chad and the local population