Global Policy Forum

African Oil: Whose Bonanza?


By Nick Kotch

National Geographic
September 2005

In a continent where natural resources are often plundered to the detriment of ordinary people, impoverished Chad -the new oil frontier- could become a model of fairness.

With his white beard, ready chuckle, and roly-poly shape, Otto Honke could easily switch to an acting job as Santa Claus if he decides that a career in development work in Africa, stretching all the way back to 1978, has gone on long enough. We're driving together in southern Chad's oil region, his base since 2002, inspecting health, education, and water projects financed by ExxonMobil, Petronas, and Chevron in a consortium that is pumping close to 200,000 barrels of oil a day from 6,000 feet (1,800 meters) below our wheels. Honke's employer, a German aid agency called GTZ, was hired by ExxonMobil to build neat blocks of classrooms in villages where children used to learn their lessons under straw roofs sitting on thick branches. Solar-powered water towers have replaced traditional wells and their brackish contents with clean, fresh water drawn from deeper beneath the sandy soil.

The idea crosses my mind on this dry and sunny day that my 58-year-old traveling companion is already a kind of Santa figure, making simple wishes come true in a poor corner of Africa and trying to ensure that—for once—the discovery of oil doesn't have to be a curse for ordinary folk. But this notion fails to survive our bumpy ride around the villages; it collides, quickly and fatally, with the negative reputation oil has earned all over the developing world and nowhere more than in this neighborhood. After all, Chadians only have to look over their western fence to Nigeria or, a little farther down the road heading south, to Equatorial Guinea, Congo, Gabon, and Angola, to see why oil in Africa is associated with problems, never with solutions.

In PR terms the crude black stuff is a hard sell, and the village projects we are touring are, at the very least, an acknowledgement of that reality. Not that charity enters into the equation, because they were built as tightly calibrated compensation for the compulsory sale of land or environmental damage or nuisance caused by Chad's recruitment, in 2003, into the club of Africa's oil-producing states. The price of entry was four billion dollars, said to be the largest amount ever spent on a private sector investment in sub-Saharan Africa.

Chad's infant oil industry is effectively a joint venture among the oil companies, the government, and the World Bank. Boiled down, their mission statement is to extract oil profitably, to share the proceeds in a transparent and equitable way, to protect the environment, and to spend most of the government's share on reducing poverty. The big question is whether this original formula can transform one of the continent's classic basket cases into a functioning state, providing its nearly ten million citizens—whose annual per capita income is about $1,600—with a decent future after decades of civil war, injustice, and upheaval. But pending the achievement of this ambition, gratitude is simply not on the agenda in the villages we visit. Distrust and unsatisfied expectations certainly are.

"They said the majority of us would get rich, but we have just got poorer. Nothing good has come from the oil," mutters Mbangtoloum Ngarambé, a lanky peasant farmer who grows cotton, rice, and millet in the fields around his village, Kayrati. We stand in the shade of a mango tree, watching women and children filling their enamel basins at the new water pump, which seems to me to be working pretty efficiently. "Isn't that something good?" I ask, interrupting the flow of Ngarambé's displeasure and pointing at the contraption. "Yes, that's good." "And the new classrooms over there?" "Yes, they are good." Cleaning his teeth with a little stick, Ngarambé studies me out of the corner of his eye as we run through all the things that are lacking around here: a modern economy with jobs, a hospital close by, paved roads, security. We talk in French, a legacy of Chad's period as a colony of France until 1960.

Playing devil's advocate, I ask him why he expects so much to be provided by foreign oil companies and so little by his own government. "You know very well that our government isn't going to do those things," Ngarambé replies. I sense that another of the farmers in our group, a compact man called Hubert Nodjimbay, has marked me down as an oil company stooge. He chips in. "From five in the morning the village is invaded by dust from the trucks. The children are always coughing. But when you talk to Esso's people about it, they don't listen." What does Esso, as ExxonMobil is known in these parts, say about that? That the company has never had to listen so intently and for so long as in southern Chad's Doba oil fields and in neighboring Cameroon, whose territory is crossed by the 663-mile (10,067-meter) pipeline that carries the heavy crude to an offshore loading terminal near Kribi.

"There has been the most preparation of any oil project in Africa, we know that for a fact," Miles Shaw, Esso's public affairs adviser in Chad, told me, reeling off the stats. "The sheer mass of numbers—over 6,000 village meetings, well over 150 people employed in the environmental and safety program," he said, answering my questions in a prefabricated office block inside "KFC," Komé Five Camp, the consortium's town-size operations center. "It's partly because this project has been so unique. There were 14,000 land users in Chad and Cameroon to negotiate with and who were compensated individually."

The negotiations seem to have been especially protracted in Danmadja, a settlement of 492 souls near Komé. In fact they were still dragging on in a desultory way when our masters-of-the-universe convoy of four-wheel drives rolled into the village, which consists mainly of thatched-roof huts made of brown mud bricks. Because construction of oil-field facilities had obliterated some of its fields and wild fruit trees, Danmadja was awarded collective compensation as well as payments to individuals. After some debate the people had decided they wanted a covered market to sell their produce—rice, peanuts, millet, sesame, beans, and cassava. GTZ hired a local contractor to build a simple but sturdy structure of metal shelters. But the new market was not being used, for reasons that were hard to pin down, and its green-painted struts were already showing signs of rust. Among the explanations advanced by Chief Daniel Assyo and a group of his villagers, three stood out: The covered spaces were fewer than agreed; the contractor had walked off with the keys to the new market's public lavatories; a local senior chief had failed to inaugurate the project.

With Esso executives looking on, Honke betrayed his impatience. "People must use this market, otherwise it serves no purpose," he told the villagers, promising to send an engineer the next day to complete the finishing touches. As we drove off, I asked him about his impressions of our visit. "When I first came here, I found people's expectations about the oil were incredible. They believed that the money will fall from heaven like manna," he said. There were some mind games going on, that much was evident, and one strategy I encountered among local people throughout the oil fields was never to let the consortium think it had done enough. The psychology was clear: Keep up the pressure because this moment, when one of the world's richest corporations is among us, making barrels of money but spending it freely, may never come again.

If the preparation requirements for Chad's oil industry were rigorous, the same can be said for its routine operations, which are subject to a prodigious panoply of safeguards and firewalls. A panel of international experts scrutinizes the World Bank's involvement in the project, reporting directly to the bank's president. A government technical committee and a host of foreign and local NGOs keep beady eyes trained on revenue flow, pollution levels, oil production, emissions, dust, compensation, job equity. Perhaps most important of all there is the Collí¨ge de Contrí´le et de Surveillance des Ressources Pétrolií¨res, a watchdog committee whose job is to monitor government expenditures on priority needs like schools, hospitals, and roads. "The nice part is that we are starting with a sheet of clean paper in Chad," Ron Royal, a veteran oilman from Canada and president of ExxonMobil's Chad operations, told me after a tour of the state-of-the-art facilities at Komé Five Camp. "The world changes, and there is an undercurrent of transparency that is coming, and as long as there is a level playing field, we are fine with that."

Royal was raising the key question on a lot of minds: The consortium operating in the Doba fields is locked in with the government and the World Bank in an arrangement that should greatly reduce corruption, but will the same regime apply if, as seems a good bet, the consortium or other oil companies find new exploitable oil deposits under Chad's 495,755 square miles (1,284,000 square kilometers)? Or will the key parties adopt the antisocial ways of Africa's other producers, which must be cheaper for the companies and are certainly more lucrative for the local elites? In other words, will the Chadian experiment fail at the first challenge?

Hoping for an answer, after a shortish wait in his antechamber, sunk in the soft depths of a well-used sofa, I was shown into the office of Chad's oil minister, Youssouf Abassalah. No computer was visible in the long room, nor did I see one elsewhere in the bare-walled ministry in N'Djamena, the capital. I wondered how the minister and his officials could possibly be keeping up with the 24-7 pace of the world oil business. But holding that thought to myself, I asked Abassalah whether the government would stick with the same revenue management system that it had with the consortium. I reminded him about the intemperate and anonymous attack on the oil companies, accusing them of ripping off Chad, that had beenissued in a communiqué from the presidency a few months before and that had set the alarm bells ringing in Houston. Abassalah picked his words. He said the government would honor the principle of using oil revenue to combat poverty, although the precise form might change in future agreements. But he went on to say that 18 months after production began, the benefits of oil were coming through very slowly. He noted unhappily that before the price of a barrel was shared out, $20 had already been deducted for transporting it and discounting it because of its unsuitability for most refineries. "What reaches the Chadian state is really minimal compared with the people's expectations."

Chad is still one of the poorest countries on Earth, and N'Djamena is one of the worst-kept cities in Africa, which is saying something. If the municipality pays people to do refuse collection, its agents are missing in inaction. The micro-weight plastic bags that are the bane of the continent are so entrenched and ubiquitous here that they seem to grow out of the sandy soil, like billowing weeds. One day Doba might look more like an oil industry capital, in the Houston or Aberdeen mold, if not on their scale. For now, it has one long street, lined on both sides by wooden stalls and kiosks selling grilled meat, Gala beer, used tires, and other bits and pieces. It has no paved road, no Internet café, and minimal electricity. There are fewer than a dozen gas stations in the whole of Chad, and Doba hasn't got one of them. Like everywhere else, roadside vendors sell Nigerian gasoline from glass flagons, using plastic hoses and suction to get it into your tank. A 40-minute drive away at the consortium's KFC, nearly 200,000 barrels of oil race daily down the pipeline, and giant power plants feed the oil operation 120 megawatts of power—more than five times Chad's entire national capacity. As night falls, the contrast is not lost on Doba's residents when they light their candles and kerosene lamps.

Sometimes knowing a place over a long period helps keep things in perspective. During my two previous visits to Chad, in 1982 and 1990, I hadn't had time to count plastic bags or quiz the government of the day about its budgetary management. In fact, on neither occasion had there been a government. Instead of arriving on a direct Air France flight from Paris, as I had this time, I twice limped through a 24-hour endurance course from my base in Abidjan in Cí´te d'Ivoire, nervously entering N'Djamena aboard a dugout canoe after being punted across the shallow Chari River that there marks the border with Cameroon. Each time, I was painfully aware of being a day late for a Chadian regime change, one of the classic features of Africa in the 1970s and '80s. In 1982 it was the turn of Goukouni Oueddeí¯ to leg it, chased over the Chari by Hissí¨ne Habré. Eight years later Habré was forced to make the same one-way journey, after a cash pickup at the central bank and a visit to dungeons in the presidential palace where his personal guard is reckoned by Amnesty International to have polished off more than 300 political prisoners. By the time my BBC colleague and I had panted and puffed into the beat-up city, Idriss Déby's turbaned Zaghawa tribesmen had things under control and were sitting on looted sofas at their checkpoints.

Déby has been president ever since. There is a new bridge across the Chari, and much of the masonry that was pockmarked by rounds from heavy machine guns has been replastered. There have been coup plots, real and rumored, but none so serious that Déby's boatmen had to prepare the river barges. He has kept out of the fighting in Darfur, no mean feat since his Zaghawa kinsmen are among the belligerents. To cap it all, the oil in the south that everyone had known for years was waiting patiently underground for the fighting to stop, has started to flow. It is no longer risible to talk of a Chadian state. But in the tripod with the World Bank and the oil companies, one leg is still looking distinctly wobbly. It's the one stamped Government of President Idriss Déby. How much weight can it take?

Thérí¨se Mékombé is a women's rights campaigner who in 1999 supported calls by Chad's NGOs for a two-year moratorium on the oil project on the grounds that nobody was ready for it—neither the government nor civil society nor the southern peasants who would be most affected. The appeal failed, and the next year, after the World Bank gave the project its formal blessing, construction blasted ahead. Mékombé comes across as a practical, hands-on sort of person when we meet in one of N'Djamena's two international hotels during the baking heat of a January afternoon. She wears a yellow robe and a matching headdress. I can't help making a positive mental note when I see that she drives a small car. As one of the members of the Collí¨ge de Contrí´le, the oil revenue oversight committee, she is one of the most influential people in Chad. "We know what has happened in other oil-producing countries—Nigeria, Congo, and Gabon—and their experience of failure is what motivated us," she says."As for the NGOs, they are at least some deterrent to those who seek to profit from our naí¯veté, our incompetence, our lack of time to prepare for the arrival of oil."

Like a lot of Chadians, Mékombé's education in petroleum matters has been less a fast learning curve than a jump jet's vertical liftoff. But even after all the seminars and foreign field trips, the briefings with oil traders and World Bank economists, some numbers still don't seem to add up. There's always that nagging feeling you might be getting ripped off. "Oil is a complicated domain. These oil companies are giants and monsters which can crush you," Dobian Assingar, Mékombé's colleague in the collí¨ge, tells me during a break from teaching at a packed anticorruption workshop in N'Djamena. Like Mékombé, Assingar, who's a lawyer, emerged from the ranks of prodemocracy NGOs, where distrust of Déby's regime is intense. Real power is perceived as the preserve of the president's family and clan and, more generally, of Muslims from the desert north at the expense of "useful Chad," as the French colonialists used to call the south.

In his courtroom baritone, dressed with the weekend elegance of a Parisian intellectual, Assingar singled out some of the challenges the collí¨ge is up against. When the president's older brother, Daoussa Déby, is the director-general of Chad's biggest road construction company, which in turn is bound to bid for some of the most lucrative contracts the oil proceeds are intended to finance, the risk of political pressure is clear. Assingar says that because the oil money from the consortium is ring-fenced and next to untouchable for now, well-connected people are getting frustrated and dipping greedily into other pots. Government receipts from old-fashioned sources like local taxes and customs duties plunged in 2004. "It is as though those resources became the pocket money of a group of people," he says. Even before the money started flowing in, Chad ranked 142 in Transparency International's Corruption Perceptions Index for 2004. Nigeria occupied 144th position. Only two countries, Bangladesh and Haiti, fared worse.

But when asked to assess the collí¨ge's efficacy in 2004, the first year oil revenue hit the treasury coffers, Assingar has a sheet of paper showing that a respectable 76 percent of the funds under its control had been allocated to approved projects. He would see how things pan out in 2005 before deciding whether to remain a member. "But for sure, as soon as any abuses become flagrant, I shall resign." Unconvincing explanations came out of the government early this year when Chad's teachers threatened to strike, citing three months' salary arrears, a far longer default than they had suffered in the years before oil. "Strangely enough it is when the government's pockets are filling up with oil money that it is unable to pay teachers' salaries," said Ange-Gabriel Soulassengar, then a lay worker with the Roman Catholic Church, the institution that has emerged as the oil project's sternest critic in Chad.

Soulassengar was based at the bishopric in Laí¯, a little town on the eastern bank of the Logone, a wide river that winds sluggishly through the south, blessing its fertile plains and marshes. There is talk of oil being nearby, and although ExxonMobil and the Canadian company EnCana have yet to announce any commercially viable finds, the local people and their clergy are already worried about the prospect. The 60-mile (100-kilometer) drive north from Doba to Laí¯ took me three hours. Rice paddies and fields of sorghum stretched toward the Logone, and longhorn cattle ambled by, kept in line by the tapping sticks of Fulani herdsmen. Mango trees and rí´niers, the sturdy local palm trees, gave shade and shelter. The villages were busy and tidy, with brick huts and earthen grain stores enclosed by walls of matting in square family compounds.But if this paints a picture of bucolic peace, it would be a serious distortion. Reality for the people of southern Chad is a life expectancy of 48, cut short by malaria and increasingly by AIDS. It is also constant fear of the intentions of anyone armed and in uniform, no choice of what economic activity to pursue apart from farming in a fickle climate, and powerlessness to negotiate a fair price for cash crops. And the word wafting up the sandy track from Doba is that if oil is discovered, the 15,000 people of Laí¯ should not assume that their existence will change for the better.

Father Alexandre Canales Maza has been a missionary in this area since 1978, when he arrived from Spain at the age of 30, dispatched by the Comboni Missionary Society. Every three years he goes home to Santander to see his family, but his life is here, in southern Chad. When he first arrived, Canales worked as a teacher. Soulassengar was a schoolboy in a neighboring town, and when I visited, 25 years later, they were colleagues in the Laí¯ branch of the Catholic Church's Justice and Peace Commission. "People's eyes are opened," Canales said. "It is known that Doba wasn't really ready for the oil. No oil has been found at Laí¯ yet, but whatever happens, there will be consequences for us. We're making sure that the people don't lose out and that they know how to make their demands." When I arrived in Laí¯, he and Soulassengar had just hosted a workshop in the town about—surprise, surprise—oil. The meeting drew 140 people, including representatives of the oil companies, the Collí¨ge de Contrí´le, local peasants, and some of the key NGOs. It achieved its main purpose, which was to set up a grassroots network to defend the interests of the local citizenry. "The population is saying, 'We are the owners of this land, these trees, this fishing ground, so just wait a moment!' " was how Soulassengar summed up the mood. Who knows? Maybe the oil companies will break the habit of several lifetimes and listen carefully to the peasants of Laí¯. The whole world will be a better place if they do.

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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.