Chad/CameroonDevelopment Project

Report No. 13Fourth Quarter 2003

Annual Report 2003

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This report has been prepared by Esso Exploration andProduction Chad Inc., in its capacity as Operator of theConsortium and as Project Management Company on behalfof the Tchad Oil Transportation Company S.A. (TOTCO)and the Cameroon Oil Transportation Company S.A.(COTCO).

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his thirteenth in the series of Quarterly Reports for the Chad Export Project (also referred toas the Chad/Cameroon Development Project) covers the period from October 2003 through

December 2003. The Annual Project Summary for 2003 has been combined with this report inthe form of topic-by-topic summaries and data tables.

This report reflects the activities of the Project operating company and its prime contractors,with a particular focus on compliance with the Environmental Management Plan. Severalentities share responsibility for implementing the Project.

• Oilfield development in Chad is conducted by Esso Exploration and Production Chad Inc.(EEPCI) on behalf of the Consortium (Esso, Petronas, ChevronTexaco).

• Pipeline activities in Chad are conducted by the Tchad Oil Transportation Company S.A.(TOTCO).

• Pipeline activities in Cameroon are conducted by the Cameroon Oil TransportationCompany S.A. (COTCO).

• During construction, EEPCI is providing project management services to TOTCO andCOTCO.

Quarterly Reports are submitted through, and subject to verification by, the World Bank andLender Group as a reporting requirement of the Project’s partnership with the Bank and the twohost countries. Annual Project Summaries are also published early in each year.

This report also represents a commitment to transparency by Esso and its co-venture partners.By publishing this information, the Project wishes to make it possible for the World Bank andLender Group, the citizens of the host countries, interested non-governmental organizations(NGOs), and others to stay well informed about the Project as it unfolds.

The Quarterly and Annual Reports are posted on the Project’s website (www.essochad.com). Alimited quantity of printed reports is also distributed to stakeholders in fulfillment of reportingrequirements and to make information more readily available to the citizens of Chad andCameroon, where very few people have access to the Internet. This Quarterly Report is alsoavailable in French.

Please note that October 2000 has been designated as the official start date of the Project for thepurposes of data compilation. For consistency, monetary unit conversions have been based on arate of 650 FCFA to one U.S. dollar.

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Snapshot Summary of the Quarter 1

Construction & Commissioning 7

Reportable EMP Situations 15

Safety 23

Consultation & Communication 27

Compensation 37

EMP Monitoring & Management Program 41

Local Employment 53

Local Business Development 59

Worker Health 67

Community Health 71

Environmental Foundation 75

Community Involvement 81

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• As the year 2003 came to a close, the Project was on target to reach full production status asscheduled.

- Commissioning of the final facilities needed to reach full production will begin in the firstquarter of 2004 with peak production levels expected by mid-2004.

- In the fourth quarter, the Project exported nine tankers of Chadian crude oil through themarine terminal located near Kribi, Cameroon.

• Drilling crews have made substantial progress in the second of three oilfields located insouthern Chad that are being developed by the Project.

- All five of the Project’s oil rigs were working in the Komé oilfield after completing thedrilling program in the Miandoum field.

- Based on progress to date, the Project anticipates that crude oil from the Komé oilfieldwill begin flowing into the system in the first quarter of 2004.

- A total of 115 wells had been drilled in the three oilfields as 2003 ended, about 45% of theplanned number.

• Mechanical construction of the central oilfield facility near Komé, Chad, was almost finished,having approached the 99% completed mark. Two key components of the central oilfieldfacility were a primary focus of year end construction activity, the Komé Gathering Stationand the Central Treating Facility.

• A total of four minor Environmental Management Plan non-compliance situations wererecorded in the fourth quarter of 2003. There were no reportable spills in the quarter.

- All four of the non-compliance situations were classified at Level I, the lowest level ofnon-compliance.

- The total number of non-compliance situations was down by 85% in 2003 compared to2002, a reflection of the Project’s continuously improving level of EMP compliance andthe shifting nature of the work as the Project transitions from the construction phase tothe production phase.

• A total of two Lost Time Incidents were recorded in the fourth quarter of 2003. Overall, theProject significantly improved its safety performance in 2003, based on a trend analysis of itscumulative safety record.

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- The year-on-year cumulative Recordable Incident Rate improved by 14%, achieving a rateof 0.43 incidents per 200,000 worker hours at the end of 2003.

- The year-on-year cumulative Lost Time Incident Rate improved by 20% to a rate of 0.04incidents per 200,000 worker hours at the end of 2003.

- The 2003 annual traffic accident tally was 30% lower than it was in 2002, with 97 accidentsrecorded in 2003 compared to 136 accidents the year before.

• The Project conducted over 570 public consultation sessions in the fourth quarter of 2003,reaching nearly 12,000 people.

- The social closure process has nearly been completed in Cameroon. In the first phase,consultation teams visited 294 communities along the pipeline route and the upgradedroad to document the socioeconomic aspects of the Project and identify any remaininggrievances. The teams have made considerable progress on a series of additional visits tothese same communities to finish the closure process.

- The Project has made available to academics and the general public a collection ofscientific studies that provided the foundation for the Environmental Assessment and theEnvironmental Management Plan. Sets of the studies have been distributed to severallibraries and other public repositories in both Chad and Cameroon.

• The Project has finalized its dust control strategy for the oilfield area in southern Chad,addressing an important public consultation theme.

- One part of the strategy has already been implemented. A high-traffic road has beentreated with industrial molasses.

- In addition, some high-traffic road segments will be paved with a form of asphalt calleddouble bitumen surface treatment or DBST.

• The Project has so far paid approximately 7.8 billion FCFA ($12 million) in cash and in-kindcompensation to individual land users in Chad and Cameroon. Over 212 million FCFA ($326thousand) was added to the total in the fourth quarter of 2003.

- In Chad, individual compensation distributed in the fourth quarter totaled 110 millionFCFA ($169 thousand).

- In Cameroon, individual compensation paid in the fourth quarter was 102 million FCFA($157 thousand).

• The Project has again expanded its popular improved agriculture training program, analternative offered to those eligible for resettlement in the oilfield area.

- Only 33 households have so far chosen to be physically resettled, as compared to theplanning estimate of 150 stated in the Project’s environmental documentation. (Noresettlement was expected in Cameroon and none has taken place.)

- A total of 92 households have chosen the improved agriculture training alternative,making it almost three times more popular than the physical resettlement option.

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• A recent study concludes that the Project has had and will continue to have significantpositive economic impacts in Chad.

- For the peak year of construction, 2002, the study found that economic effects due to theProject were equivalent to one-fifth (20.7%) of the country’s entire Gross DomesticProduct for the study's baseline year of 2000.

- For the first full year of peak crude oil production in 2005, the study predicts that theProject will generate economic activity in Chad equivalent to one-fourth (26.0%) of thecountry’s entire Gross Domestic Product for the baseline year of 2000.

- The study also found that the mitigation measures implemented by the Project have beensuccessful in preventing major inflationary effects.

• Work has been completed on Project-funded archaeology facilities for the study and curationof the numerous artifacts discovered during construction work in Chad and Cameroon.

- A new building has been constructed on the campus of the University of N’Djaména inChad.

- An existing government building in Yaoundé has been upgraded, renovated, and turnedover to Cameroon’s Ministry of Culture.

• The shift from the construction phase to the operations phase dominated the employmentsituation during the last half of 2003. Overall Project employment fell by about 1,000 workersin the fourth quarter to a total of just over 5,000 people.

• Wages paid to Chadian and Cameroonian workers in the fourth quarter of 2003 totaled over4.3 billion FCFA ($6.7 million).

- Total wage payments to Chadian workers approached 3.6 billion FCFA ($5.5 million).

- Total wage payments to Cameroonian workers were over 750 million FCFA ($1.2 million).

• The Project spent 30.6 billion FCFA ($47.1 million) purchasing goods and services fromChadian and Cameroonian suppliers during the fourth quarter of 2003. The amount spentthis quarter continues a downward trend coinciding with the transition from the constructionphase to the operations phase. Total Project expenditures with local businesses fell nearly 16%compared to the previous quarter.

• Project clinics provided just over 8,000 worker medical consultations during the fourthquarter of 2003.

- The Project met its goal of training “first responders” to deal with first aid emergencies. Atotal of 10% of the construction workforce has now qualified as “first responders,”identified in the field by green crosses on their hard hats.

- The Project’s malaria prevention efforts have proven to be effective. For example, themalaria incident rate for the non-immune worker population declined by over 38% in2003 to 7.02 cases per 200,000 work hours.

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• The Project responded quickly to a severe cholera epidemic that struck the area aroundDompta and Toubouro in northern Cameroon by flying a shipment of medicines to thegovernment medical clinic in Gbengboy. The epidemic killed 22 people among a total of 133recorded cases.

• The Project-supported Roll Back Malaria campaign in Cameroon has distributed anti-mosquito bed nets in the fourth of its five targeted communities. This distribution was thelargest to date, with 20,000 nets being given to the residents of the Bélabo area in the vicinityof Pump Station 3, along with training on malaria prevention.

• A housing improvement program for the Bagyeli/Bakola people of southern Cameroonbegan in the fourth quarter. This initiative, which is part of the Project’s community andregional compensation program in Cameroon, includes close collaboration with theFoundation for Environment and Development in Cameroon (FEDEC). Residents of eligiblesettlements have been supplied with building materials to construct model houses.Technicians hired by the Project provide hands-on training in improved house constructiontechniques.

Oil Field Development Area

Pipeline

International Boundaries

Maintenance Area Boundaries

LEGEND

OVERVIEW OF PIPELINE

TRANSPORTATION SYSTEM

CONGO

CHAD

CENTRAL AFRICAN REPUBLIC

GULF OFGUINEA

DOUALA

KRIBI

YAOUNDÉ

TOUBORO

Dompla

CAMEROON

NIGERIANGAOUNDÉRÉ

KOMÉ

BAIBOKOUM

DOBA

0 100 200 Kilometers

MEIGANGA

NANGA EBOKO

BATCHENGA

NGOUMOU

DENGDENG

BELABO

Location Map

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PUMP STATION #2

MAINTENANCE AREA #1

MAINTENANCE AREA #2

MAINTENANCE AREA #3

MAINTENANCE AREA #4

OIL FIELD DEVELOPMENT AREA(INCLUDES PUMP STATION #1)

PUMP STATION #3

MARINE TERMINAL

PRESSURE REDUCTION STATION

BIPINDI

LOLODORF

MEIGANGA

LOLODORF

NGAOUNDAL

D M

GROGRO P

DAMES & MOOREDD O O OP C POR R

Major Roads (In Study Area)

Railroad

Marine Terminal (FSO)

Chad Export Project

MIANDOUM FIELD

LEGEND

Komé Field

Miandoum Field Bolobo Field

Villages / Towns

Gathering Stations Rivers

OVERVIEW OF THE OIL FIELD PROJECT AREA

(from Chad EA)

Loulé

GALABA

Nya

MEKAPTI

BENDOMANBOE

GATHERING SYSTEM

BÉBÉDJIA

Logo

ne

DANGDE

KAYRA

DANGOUM

MIANDOUM

BELA

KOMÉ

KAGROVE

BANGA

BÉRO

DOBA

BOLOBO FIELD

KOMÉ FIELD

Pendé

B-1

M-1

GATHERING SYSTEM

BEGADAM-1

AIRFIE

LD

PIPELIN

E

BOLOBO

OPERATIONSCENTER

SAVANNA

SAVANNA

0 42 6 Kilometers

D M

GROGRO P

DAMES & MOOREDD O O OP C POR R

Location Map

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Chad Export Project