Slide 1

Chad-Cameroon Pipeline ProjectPresentation FlowProject History1970 consortium of oil companies discover oil in Chad

Consortium consisted of Conoco, Chevron, Exxon & Royal Dutch/ Shell

1979 field development suspended due to civil unrest Conoco withdrew & Chevron sold its stakes to Elf Aquitaine

1996 Consortium signs MOU with both governments

1999 Shell & Elf drop out

Petronas & Chevron joined ExxonMobil to form the final consortium Exxon (40%), Petronas (35%) & Chevron (25%) stakes Project DescriptionProject Cost - $ 3.7 bnField System ($ 1.5 bn)Construction of 300 wells, treatment facility & operations centerTo be owned by joint venture known as Upstream ConsortiumProbable reserves of ~ 917 million barrelsCorporate finance chosen for field systemExport System ($ 2.2.bn)Construction of 1070 km pipelineTOTCO & COTCO own the Chad & Cameroon portion of the pipeline respectivelySponsor agree to buy output at market rate till production endsProject finance chosen for export systemPrivate Sponsors(Exxon/Petronas/Chevron)Govt. Of ChadGovt. Of CameroonUpstream ConsortiumTchad Pipeline Co. (TOTCO)Cameroon Pipeline co. (COTCO)100%11%10%89%85%5%Corporate structureFinancial structureProject Cost - $ 3723 mnHost countries were financed by IBRD & EIB through loans of $ 77 mn & 42 mn respectively Benefits & Roadmap

Benefits from the projectOpportunity to stimulate economic development in Chad (one of the poorest countries)The project will increase Govt revenues by nearly 50% which can be used for poverty reduction programsHigh profitable sourcing ( ~$11/ barrel) of crude oil for the consortiumProject ReturnsWhy World BankProvide security to the sponsors given the volatile nature of the region

Extensive experience in lending & policy with developing countries

WBs involvement would ensure:Host countries receive their returnsHelp jumpstart Chads economyProtect environment & indigenous people

In absence sponsors might look for safer options

Ensured $77 mn lending from IBRD

Revised sponsors plans to address key issuesRevenue Management PlanDeveloped by World Bank for Chad governmentEnsure oil revenue not used for economic distortion, corruption etc.

Chad receives $1.8 bn as revenue taxes represent 16% of it Govt. To spend tax revenue as per discretion royalties & dividends to be deposited in Special Petroleum Revenue Account10% of remaining to finance poverty reduction programs85% of remaining deposited in Chadian national bank for development of education, health, rural, infra & environment15% for development in Doba region

RMP Control & OversightMulti level checks & balances developed by World BankAnnual expenditure program of govt. To be reviewed & approved by oversight committe