Chad/CameroonDevelopment Project

Report No. 8Third Quarter 2002

Chad Export Project Report #83rd Quarter 2002

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).

Preface

his eighth in the series of Quarterly Reports for the Chad Export Project (alsoreferred to as the Chad/Cameroon Development Project) covers the period from

July 2002 through September 2002.

This report reflects the work of the Project operating company and its contractors with aparticular 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 ProductionChad Inc. (EEPCI) on behalf of the Consortium (Esso, Petronas, ChevronTexaco).

• Pipeline activities in Chad are conducted by the Tchad Oil Transportation CompanyS.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 TOTCOand COTCO.

Quarterly Reports are submitted through, and subject to verification by, the World Bankand Lender Group as a reporting requirement of the Project’s partnership with the Bankand the two host countries. Annual Project Summaries are also published early in eachyear.

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

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

Please note that October 2000 has been designated as the official start date of the Projectfor the purposes of data compilation. For consistency, monetary unit conversions havebeen based on a rate of 650 FCFA to one U.S. dollar.

T

Table of ContentsSnapshot Summary of the Quarter 1

Construction Progress 7

Reportable EMP Situations 13

Safety 19

Consultation & Communication 25

Compensation 29

EMP Monitoring & Management Program 33

Local Employment 45

Local Business Development 49

Training 51

Worker Health 53

Community Health 57

Waste Management 59

Environmental Foundation 61

Transition to Oil Production Phase 63

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Snapshot Summary of the Quarter• Pipeline construction started in Chad this quarter. Crews began installing pipe

south from Komé towards the point where the route will cross the M’béré River andthe border with Cameroon.- Pipeline workers have now welded together and buried about two-thirds of the

pipe, a total of 700 out of 1,070 kilometers.- The last of the 87,000 lengths of pipe needed to construct the crude oil

transportation pipeline have been delivered to storage yards along the route.

• Crews on the oil well rigs more than doubled the number of drilled wells, reaching atotal of 26 by the end of the third quarter.- This rate of progress was possible because the oil well rig crews have

dramatically improved the time required to move a rig from one well site toanother. They reduced the time of an average rig move by 50%, and by the end ofthe quarter, rig moves were taking only two to three days.

- Oilfield construction workers started laying flow line and gathering system pipethat will collect crude oil from wells and move it to the central oilfield facility fortreatment.

• Steel erection and cement foundation pouring is now underway for virtually everystorage tank, pipe support, and building component of the central oilfield facilityand the crude oil gathering station at Miandoum.

• Construction of the two key components of the offshore marine terminal movedwell past the 60% complete point this quarter.

• Contractor and Project field monitors recorded a total of 16 Project-reportableEnvironmental Management Plan non-compliance situations this quarter.- This represents the Project’s best compliance performance for a full-quarter since

construction began in late 2000.- However, pipeline construction in Chad was shut down for four days to provide

time for the contractor to correct a Level II-type non-compliance situationinvolving the recruitment and hiring of unskilled workers.

Section

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Snapshot Summary

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- No critical (Level III) non-compliance situations have been recorded by theProject to date.

• The Project's overall workplace safety trends remained positive this quarter.- Several Project contractors achieved significant safety milestones in the third

quarter. For example, in Chad, workers for facilities construction contractor TCChad worked ten million hours without a lost time incident as of the close of thequarter.

- The traffic accident injury rate for the Project continues to be less than half therate for North American highways. The Project rate is just under 55 per 100million miles driven, compared to the North American rate of 116 injuryaccidents per 100 million miles driven.

• Sadly, a mechanic who was repairing a worker transport bus was killed in anaccident at a Project contractor workshop this quarter.

• More than 13,500 Chadians and Cameroonians participated in public consultationsessions this quarter, attending approximately 500 meetings.

• An action plan has been drawn up by the Project to improve some of the conditionsin the Komé Atan settlement that has grown up over the years outside the KoméBase Camp.

• As of the end of the quarter, the Project has paid over 6.2 billion FCFA ($9.6 million)in cash and in-kind compensation to individual land users, with over 573 millionFCFA ($882 thousand) added to the total this quarter.

• Substantial progress was made in implementing the Project's supplementalcompensation programs during the third quarter.- In Cameroon, the residents of 230 of the 240 eligible villages and 25 of the 26

eligible arrondissements had selected their improvement projects. The projectsinclude schools, clinics, water wells, agricultural supplies and tools, and varioustypes of community buildings.

- In Chad, the NGO contracted to manage the community compensation programcompleted the initial round of consultations, conducting at least one session witheach of the 68 eligible villages. Five of the 68 villages have selected their micro-development projects.

• Oil spill response planning continued to advance this quarter in preparation for theoil production phase of the Project.- Drafts of all six area-specific oil spill response plans were completed this quarter

and submitted to the governments of Chad and Cameroon for review.

Snapshot Summary

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- Public information and consultation meetings will be held in Chad andCameroon in the fourth quarter to discuss the plans.

• Pre-construction archaeological survey work in Cameroon was completed thisquarter for the northern construction spread of the pipeline. Also, in preparation forthe start of pipeline construction in Chad, the Chadian archaeological teamjourneyed to Cameroon to learn more about techniques for monitoring pipelineconstruction activities.

• The Project’s direct workforce climbed above 12,000 people this quarter.- Wages paid to Chadian and Cameroonian workers totaled nearly 6.6 billion

FCFA (over $10 million) for the quarter.

• The Project spent approximately 65.6 billion FCFA (over $100 million) purchasinggoods and services from Chadian and Cameroonian suppliers this quarter, anincrease of almost 9% over the previous quarter.

• The number of worker training sessions conducted by the Project increased by about16% from the previous quarter, reaching a total of 2,489 sessions. High skills trainingincreased from the previous quarter, to over 1,450 training sessions.

• New malaria prevention procedures went into effect this quarter, in an effort tomake sure that all non-immune workers take effective anti-malaria medication. Theprocedures include intensive education and counseling, backed up by randomtesting for compliance with the Project’s requirement for taking the medication.

• Community health initiatives for the quarter included support for a new clinic toserve the communities in the vicinity of Pump Station 2, as well as for Roll BackMalaria and STD/HIV/AIDS education campaigns.

• During this quarter, the Foundation for Development and Environment inCameroon:- Chose the World Wildlife Fund - Cameroon (WWF) as the Implementing

Organization for the Foundation’s environmental conservation work in the newCampo-Ma'an National Park.

- Held ceremonies at a Bagyeli/Bakola settlement to commemorate the formalbeginning of the Indigenous Peoples Program.

• In preparation for the transition from construction to production, engineers havedeveloped startup plans for the crude oil pipeline. The first crude oil that will beproduced will take approximately two months to journey from Komé, Chad,through the 1,070 kilometer long pipeline, to the coast of Cameroon where it will beloaded onto tankers and delivered to world markets.

Oil Field Development Area

Pipeline

International Boundaries

Maintenance Area Boundaries

LEGEND

FIGURE 1-2

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

N

S

EW

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

FIGURE 1-1

D M

GROGRO P

DAMES & MOOREDD O O OP C POR R

Location Map

N

S

EW

Chad Export Project

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