Chad-Cameroon Oil Pipeline Essay

Although significant oil reserves have been found in the early 1970s, these could not be developed because 1- Chad is a landlocked untaught with limited domestic demand 2- civil war prevented the cosmea of a horse barn investment environment and caused the departure of several investors. Since peace was effected in 1990, investors and the earth Bank returned to Chad for developing its oil reserves.In position to justify the large investment, access to the manhood market was sought via a pipeline through Cameroon, which is also a relatively poor province that can benefit from the investment and transit revenues. The World Bank has been support internal resource extraction based development around the world and, in particular, in Africa as the primary driver for economic development and poerty reduction in these countries. But, the Bank has also been heavily criticized for flunk to achieve these goals as the revenues from resource development do not arrival the majority of th e society.With the Chad-Cameroon pipeline and oil development in Chad, the Bank and the companies ar following a novel partnership and revenue management approach. How is the put up financing different? How will this new approach work? lead Chad and Cameroon benefit from this approach? Background1 Upon getting its independence from France in 1960, Chad has been involved in 30 years of civil war. The peace was finally restored in 1990, and the coarse drifted towards multiparty democracy, until rebellion broke out again in the north of the country.In January 2002 peace treaty was signed confirming de jure reign of northern ethnicity. Chad is mavin of the least developed nations on earth with GNI per capita of around $200. Republic of Chad is rank 165th of 175 countries in UNs Survival Ranking. The agricultural sphere accounts for 36% of Chads GDP. Cotton exports account for 50% of foreign capital earnings. Chads government activity is concerned about this dependence on cotto n and wants to diversify its economy in order to mitigate vulnerability associated with excitableness of the international price of cotton.Chads only significant natural 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(predicate) 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 deathrate rate. Economic and social development information on this section comes from the World Bank web site, CIA Fact Book, and U. N. Human Development Report. Center for nothing Economics. No reproduction, distribution or attributio n without permission. Chad-Cameroon Pipeline 1 1 Case Study From Since 1990, being faced with a fall in GDP collect to unfavorable prices on major exported goods Cameroon has been engaged in several World Bank and IMF programs, aimed at poverty reduction and speedup of economic festering.As a result annual GDP growth averaged 2. 1% through 1990-2001, compared to 3. 4% in 1980s. Oil Development Conoco became the freshman foreign oil company to undertake significant oil geographic expedition in Chad with acquisition of the Chad Permit H concession in 1969. amongst 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/ blast (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 e xploration permit with term of validity until early 2004. Conoco withdrew from the project, and Exxon took over operations, discovering the Bolobo line of products in 1989 with estimated 135 million barrels of reserves. 3 Chevron, in its turn, change its share (20% interest in the Block H hydrocarbon license containing the one-third fields) to Elf Aquitaine, in 1993.