With large, unexploited oil reserves, Chad has the potential to become important to world energy markets. At present, an Exxon-led consortium is undertaking a $3.0-billion oil export pipeline project that could lead to exports of up to 225,000-250,000 barrels per day of crude oil from Chad by 2000.

GENERAL BACKGROUND

Chad is one of the world's poorest countries, with a per capita income of less than $200, an average life expectancy at birth of 47 years, and less than two percent of the population having access to electricity. Chad's recent history has been marked by several periods of civil war between the Muslim north and Christian/animist south, a succession of military coups, numerous conflicts between domestic paramilitary groups, and an extended military conflict with Libya over the mineral-rich Aozou Strip.

In December 1990, Idriss Deby and his Forces Patriotique du Salut seized power after launching an invasion from neighboring Sudan. In April 1993, opposition political and military groups attended a landmark National Conference, which resulted in the formation of a new constitution, creation of a transitional government under the leadership of President Deby, and formulation of a timetable for national elections. The country's first free, multiparty presidential elections were held in June 1996. In a run-off vote the following month, President Deby won re-election with an estimated 70 percent of the popular vote. However, many of the 14 opposition candidates protested the election's second round run-off on the grounds that a government court had eliminated 250,000 first-round (mainly anti-Deby) votes that it considered fraudulent. Despite criticism by vocal opposition groups and allegations of human rights abuses by international observers, President Deby's rule in the 1990s has brought an important degree of political and economic stability to Chad.

The agricultural sector dominates Chad's economy by employing roughly 80 percent of the population and contributing 40 percent of gross domestic product (GDP). In contrast, the industrial sector accounts for about 20 percent of GDP. COTON-TCHAD, the state-owned company that produces and exports cotton, is the country's main manufacturing concern. Although Chad is rich in mineral resources such as tungsten, bauxite, gold, iron ore, and titanium, the mining sector is relatively undeveloped.

In January 1994, Chad devalued its currency by half along with the other member countries of the Communaute Financiere Africaine (CFA) franc zone. Following the devaluation, Chad undertook an IMF-designed economic stabilization program, which included budget reform, the freezing of wage increases, and introduction of social programs to limit the ensuing impact of inflation on the population. This program also led to a sharp rise in export revenues from cotton and livestock.

OIL INDUSTRY

Chad's primary oil reserves are located in four sedimentary basins in the country's extreme south and in a smaller basin north of Lake Chad. While the country's ultimate resource potential may be as high as several billion barrels, the country's geology remains relatively unappraised. While light, low sulfur crude oil exists in Chad, the vast majority of the country's oil reserves are comprised of high viscosity, heavy oil. Consequently, the bulk of Chad's in-place oil reserves may not be economically recoverable.

Oil exploration in Chad began in earnest in the 1970s. A number of foreign oil companies were active in Chad during the 1970s and early 1980s. These included Conoco, Chevron, Continental, Elf Aquitaine, Exxon, and Shell. In this period, twenty-nine exploration wells were drilled, leading to 10 oil discoveries. The country's first oil production began in the late 1970s. At that time, Conoco and Shell began production from several wells at the 12-million barrel Sedigi field located north of Lake Chad. A project to link the field's output of 1,500 barrels per day (b/d) to a small proposed refinery in N'Djamena, the country's capital 200 miles to the south, failed to materialize after operations to shut-down following the start of Chad's second civil war in 1980.

Exploration activity slowed in the mid-1980s after the collapse of world oil prices. In 1988, an Exxon-led consortium renewed an exploration contract for Permit H, which covers 20 million acres and contains all of the country's identified oil-bearing structures. Subsequently, Exxon has concentrated on exploring and appraising previous discoveries in the Doba, Doseo, and Lake Chad basins.

In November 1996, Exxon's affiliate Esso Exploration & Production Chad, signed a memorandum of understanding (MOU) with the government of Chad. This MOU outlined the terms for development of the Doba basin, construction of an export pipeline through Cameroon, and installation of offshore export facilities in the Gulf of Guinea. The Doba basin project's total upstream and downstream costs are estimated at $3.0 billion. The project's upstream development consortium consists of Exxon (40%)(operator), Societe Shell Tchadienne de Recherches et d'Exploitation (40%), and Elf Hydrocarbures Tchad (20%). The upstream development will entail drilling 300 production and reinjection wells at the Doba basin's Kome, Bolobo, and Miandoum fields. These fields contain economically recoverable oil reserves of 900 million barrels. Due to complex geology (which is still under appraisal), oil in the Doba basin fields is trapped in two vertically separated structures. An upper layer contains 90 percent of the basin's total reserves, which are of heavy, but sweet, crude with gravities in the 17^o-24^o API range. A smaller underlying structure holds light, sweet crude with a 44^o API gravity. Production of the two crude types will require artificial lift. Submersible electric pumps will be required for heavy crude production. Gas lift will be utilized for the lighter crude. Water-cuts are projected to be high and could eventually reach 20 times the rate of crude production. Water output will be separated and reinjected into the producing zone to maintain reservoir pressure.

Initial oil production is planned for September 2000. Peak production is projected to be around 225,000-250,000 b/d. The heavy and light Doba basin crude production will be gathered and blended at a central treating facility in order to facilitate transportation. Subsequently, crude will be carried via a 650-mile pipeline to an offshore marine terminal near Kribi, Cameroon. The 30-inch export pipeline will have three pumping stations, all of which will be located in Cameroon.

The Chad-Cameroon pipeline will be built by two companies. Chad Oil Transportation Company (TOTCO) will build the 100-mile Chad pipeline link between Doba and the Cameroon border. At present, TOTCO consists of Exxon (34%)(operator), Shell (34%), Elf (17%), and the Chad government (15%). The Cameroon Oil Transport Company (COTCO) will build the 500-mile Cameroon segment of the line as well as the pump stations and offshore loading facilities. COTCO currently comprises Exxon (32%)(operator), Shell (32%), Elf (16%), the Cameroon government (15%), and the Chad government (5%). On the Cameroon coast, an onshore pipeline terminal and storage facilities near Kribi will be linked to an offshore loading buoy 6-8 miles offshore.

In addition to the Doba basin development and related export pipeline project, Exxon's MOU also includes a provision for development of the Sedigi field and construction of a pipeline link between the field and a small, new refinery in N'Djamena. As with plans in 1970s, this proposed refinery's capacity would not exceed 3,000 b/d. It would be operated by Societe d'Etude et d'Exploitation de la Raffinerie du Tchad and would mainly produce fuel for transportation and electric power generation. The Sedigi field development, which is separate from the Doba basin project, is expected to cost between $50-80 million and will involve drilling one or two wells during the next couple of years.

The Exxon consortium hopes to finalize the required financing for the Doba project by mid-1997. Project loans will be on a limited recourse basis. In addition, the governments of Chad and Cameroon are seeking outside sources of funding to support their equity shares in the two downstream projects. Financing from the World Bank and other multilateral sources would only be obtained for the downstream pipeline and export terminal projects.

COUNTRY OVERVIEW

President: Idriss Deby

Prime Minister: Djimasta Koibla

Independence: August 11, 1960 (from France)

Population (1995): 6.4 million

Location/Size: Central Africa, between the Central African Republic and Libya/796,000 square miles - slightly more than three times the size of California

Major Cities: N'Djamena (capital), Moundou, Sarh, Am Timan, Abeche, Faya-Largeau

Languages: French (official), Arabic (official), Sara (in south), Sango (in south), more than 100 different languages and dialects are spoken

Ethnic Groups: south: non-Muslims (Sara, Ngambaye, Mbaye, Goulaye, Moundang, Moussei, Massa); north and central: Muslims (Arabs, Toubou, Hadjerai, Fulbe, Kotoko, Kanembou, Baguirmi, Boulala, Zaghawa, and Maba); also non-indigenous (150,000, of whom about 1,000 are French)

Religion: Muslim (50%), Christian (25%), indigenous beliefs, animism (25%)

Defense (6/95): Army (25,000), Republican Guard (5,000), Air Force (350), Gendarmerie (4,500), French troops (800)

ECONOMIC OVERVIEW

Currency: Communaute Financiere Africaine (CFA) franc

Market Exchange Rate (2/97): US$1 = 553 CFA

Gross Domestic Product (GDP - real 1990 dollars) (1995): $1.0 billion

Real GDP Growth Rate (1993): 3.5%

Inflation Rate (1992): -4.1%

Major Trading Partners: France, United States, Nigeria, Cameroon

Current Account Balance (1994): -$37.7 million

Merchandise Exports (1994): $135 million

Merchandise Imports (1994): $212 million

Major Export Products (1994): Cotton (50%), cattle (35%), textiles, fish

Major Import Products (1994): Machinery and transportation equipment (40%), industrial goods (20%), petroleum products, foodstuffs, military equipment

Monetary Reserves (8/96, non-gold): $176 million

Total External Debt (1990): $500 million

ENERGY OVERVIEW

Minister of Mines, Energy and Petroleum: Paul Mbaidjim

Recoverable Oil Reserves (1996): 900 million barrels

Identified Sedimentary Basins: Doba, Doseo, Salamat, Bongor, Lake Chad

Oil Production (1996): None

Oil Consumption (1995E): 1600 barrels per day (b/d)

Crude Oil Refining Capacity (1/1/96): None

Foreign Oil Company Involvement: Exxon, Royal Dutch/ Shell, Elf Aquitaine

Proven Natural Gas Reserves (1996): Negligible

Natural Gas Production (1996): None

Electric Generation Capacity (1995): 29 megawatts

Electricity Production (1995): 80 million kilowatthours

ENVIRONMENT OVERVIEW

Total Energy Consumption (1995): 0.003 quadrillion Btu

Energy Consumption per Capita (1995): 0.5 million Btu (vs. 331.8 million Btu in U.S.)

Energy-related Carbon Emissions (1995): 0.07 million metric tons (negligible percentage of world carbon emissions)

Carbon Emissions per Capita (1995): 0.01 metric tons (vs. 5.42 metric tons in U.S.)

Major Environmental Issues: Desertification, civil war, drought

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File last modified: February 14, 1997

Contact:

Douglas MacIntyre
dmacinty@eia.doe.gov
Phone: (202)586-1831
Fax: (202)586-9753