Transcript

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

1

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

1

Snapshot Summary

2

- 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

3

- 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

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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

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DANGDE

KAYRA

DANGOUM

MIANDOUM

BELA

KOMÉ

KAGROVE

BANGA

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BOLOBO FIELD

KOMÉ FIELD

Pendé

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M-1

GATHERING SYSTEM

BEGADAM-1

AIRFIE

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PIPELIN

E

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OPERATIONSCENTER

SAVANNA

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0 42 6 Kilometers

FIGURE 1-1

D M

GROGRO P

DAMES & MOOREDD O O OP C POR R

Location Map

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Chad Export Project

6

7

Construction Progressespite the anticipated heavy seasonal rains, significant progresscontinued to be made this quarter in a number of Project construction

categories.

• Construction workers have now welded together and buried about two-thirds of the pipeline. They also started work on the Chad portion of thepipeline.

• The crews on the oil well rigs more than doubled the number of drilledwells, reaching a total of 26 by the end of the quarter.

• Oilfield construction workers started laying flow line and gatheringsystem pipes that will collect crude oil from wells and move it to thecentral oilfield facility for treatment.

• Steel erection and cement foundation pouring is now underway forvirtually every storage tank, pipe support, and building component ofthe central oilfield facility and the crude oil gathering station atMiandoum.

• Construction of the offshore marine terminal moved well past the 60%complete point this quarter.

Construction of the crude oil transportation pipeline reached a majormilestone this quarter as the work moved into Chad for the first time.Workers started clearing the 30-meter wide construction right of way at theoilfield end of the pipeline that will transport crude oil to the marineterminal at the coast of Cameroon near Kribi. By starting the work in Chadat Komé, they took advantage of better soil drainage conditions at that endof the pipeline route as compared to the soil conditions near theChad/Cameroon border. The crews are now working their way southtowards a link-up with the Cameroon portion of the pipeline near theborder where the route crosses the M’béré River.

Section

2D

Pipeline

Construction Progress

8

• Adding up the work accomplished by the northern and southernpipeline construction spreads, about two-thirds of the pipeline has nowbeen welded together and buried, over 700 kilometers of the 1,070kilometer total. Pipeline construction continues to advance at an averagerate that approaches three kilometers a day.

• About one-fourth of the total right of way for the pipeline has now beenreclaimed. Residents have been planting crops on the reclaimed right ofway in some areas. Elsewhere, vegetation has started the naturalrecolonization process on the reclaimed land.

• Over half of the 48 pipeline valves, called block valves, have beenwelded into place along the pipeline. The block valves make it possibleto shut down sections of the line for maintenance or in the event of anemergency. Telecommunications crews have started installing solar-powered equipment for the valves that will allow them to be remotelycontrolled from the pipeline’s central control room.

Pipeline construction crews began work in Chad this quarter, starting at Komé (inset) and headingsouth towards the point where the route will cross the M’béré River and the border with Cameroon.The pipeline in the oilfield area stretches into the distance as it runs past an oil well being drilled (topcenter) and a line of electricity power poles being installed (top right).

Construction Progress

9

By the end of the quarter, the crews on the oil well rigs had drilled a total of26 wells, 19 of them for crude oil production purposes. The remainder of thewells are being used to inject water or well clean-up/test fluids back into thedeep underground reservoir, or to explore the limits of the oilfields.Approximately 265 wells will be needed to complete the development of theoilfield area, according to current estimates.

Drilling crews made dramatic improvements this quarter on one of theirbiggest challenges - reducing the time it takes to move a rig to a newlocation after work has been finished at a well site.

• The average rig move time has been reduced to two to three days,about half the time it was taking at the close of the second quarter.

• Near the end of the third quarter, the crews set a new record bymoving one of the smaller rigs from one location to another in 18hours and one of the large drilling rigs in 38 hours. The ultimate goalis to average 24 hours for a rig move.

Oil rig crews achieved a major breakthrough this quarter, cutting by half the time it takes to move a rigto a new wellsite.

Drilling

Construction Progress

10

Approximately 870 millimeters (34 inches) of rain fell in the oilfield area ofsouthern Chad during the third quarter. Although the annual rainy seasonbrought mud, surface flooding, temporary road closures, and poor visibilityto the construction sites, progress continued to be made on the variouspermanent facilities in the oilfield area.

• At Pump Station 1, the first crude oil pumping equipment was seton its foundations. Welding of the steel crude oil storage tanks isnearly complete, and hydrotesting of the tanks is scheduled to takeplace in the fourth quarter.

• Foundations were poured for the numerous utility poles that willsupport wires to supply high voltage electricity to equipmentthroughout the oilfield area.

• Concrete pouring began for the control and administration buildingat the central oilfield facility.

• All six tanks at the Miandoum gathering station - the first of theoilfield gathering stations - are now under construction and arescheduled for completion by the end of the year.

The first pipeline pump equipment was installed at Komé this quarter (top left). Interconnecting pipesare also being installed at the Central Treatment Facility (top right), and construction began on theoffice and control room building (lower left). Crude oil tank construction is well underway at theMiandoum gathering station (lower right).

Oilfield AreaFacilities

Construction Progress

11

A major logistics milestone was achieved this quarter. The last of the 87,000lengths of pipe needed to construct the crude oil transportation pipelinehave now been delivered to storage yards along the route. This includes thepipe required for building the Chadian portion of the pipeline, which wasdeposited in a storage yard at Gadjibian.

Freight Movement

By the time the Project has been completed, approximately 350,000 metrictons of material and equipment will have been transported. That is theequivalent of moving the entire Empire State Building skyscraper, or 35Eiffel Towers, or 14 Statues of Liberty.

Moving this freight into position will ultimately require 18,500 truck loadsand 17,500 railcar loads. The Project currently has more than 350 trucksunder contract in Chad and Cameroon to help transport this freight.

3 Logistics Information3rd Qtr2002

WeeklyAverage

Truck Loads 3,781 315Railcar Loads 2,374 197Ship Loads 53 4Air Cargo Flights 116 9

Construction of the two key components of the offshore marine terminalmoved well past the 60% complete point this quarter.

• The first of two dry dock periods required to refit the tanker thatwill become the Floating Storage and Offloading vessel wascompleted. When finished, the refurbished tanker will move underits own power from Singapore to its mooring location near Kribi,Cameroon.

• Erection began in Malaysia of the Single Point Mooring unit for theFloating Storage and Offloading vessel, with assembly underway onthe tower, deck and other elements. When completed, the unit willbe towed to the offshore marine terminal site near Kribi.

In addition, logistics planning has been completed for the installation of the12 kilometer undersea pipeline that will transport crude oil on the final leg ofits journey from the oilfield area in southern Chad to the Floating Storageand Offloading vessel.

Logistics, Roads& Storage Yards

OffshoreMarine Terminal

Construction Progress

12

The first of two dry dock sessions was completed this quarter at a Singapore shipyard, advancing therefitting of the Floating Storage and Offloading vessel (top). In this photo the sandblasted, and stillunpainted hull of the ship looms above welding crews. Fabrication also moved ahead in Malaysia onthe Single Point Mooring unit, which will secure the vessel to the sea floor off the coast of Cameroonnear Kribi. The multi-story tall center post of the mooring is shown in the lower left photo and the giant(orange) bearing unit that will allow the vessel to swivel to the optimum position for weathering stormyconditions appears in the lower right photo.

13

Reportable EMP Situationsontractor and Project field monitors recorded a total of 16 Project-reportable Environmental Management Plan non-compliance

situations this quarter. This represents the Project’s best complianceperformance for a full quarter since construction began in late 2000.However, one Level II situation required a four-day shutdown of pipelineconstruction activities in Chad. The halt was called so that the pipelineconstruction contractor could make corrections after Project monitorsdiscovered deficiencies related to the recruitment and hiring of unskilledworkers. No critical (Level III) non-compliance situations have beenrecorded by the Project to date.

3 Combined Level I and Level II Non-Compliance SituationsCompared to Construction Activity (Total Workers on Job)

The combined number of Level I and Level II non-compliance situations perquarter has fallen during the overall course of the Project’s construction period.During the same period the total number of Project workers, and therefore the levelof construction activity, has substantially increased.

Section

3C

No

n-C

om

plia

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uat

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s(L

evel

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475652

106

89

123

3,521

5,087

7,559

9,89610,948

11,757

12,474 Workers

0

50

100

150

200

1Q2001 2Q2001 3Q2001 4Q2001 1Q2002 2Q2002 3Q2002

Reportable EMP Situations

14

Contractors and Esso/TOTCO/COTCO personnel are required to report allsituations that could put the Project out of compliance with theEnvironmental Management Plan and the suite of environmental,socioeconomic, and health plans filed by each prime contractor. There aretwo kinds of Project reportable situations: spills and non-compliancesituations. In addition, the Project gathers reports related to complianceinitiatives.

• Spills of hydrocarbons or hazardous materials require immediatereporting within one hour of discovery under the followingcircumstances, with written follow-up reports required to be filedwithin 24 hours:

- All spills into a water body must be reported regardless ofvolume.

- All spills onto a land surface greater than 150 liters (40 gallons) involume must be reported.

• Non-compliance situations are ranked according to three levels, asystem designed to provide early warning of developing problems sothe Project can act to resolve issues before they escalate and result inactual environmental damage.

- Level I: A situation not consistent with specifications or otherrequirements, but not an immediate threat to an identifiedsensitive or important resource.

- Level II: A non-compliance situation that has not yet resulted inclearly identified damage or irreversible impact to a sensitive orimportant resource, but requires expeditious corrective actionand site-specific attention to prevent such effects.

- Level III: A critical non-compliance situation, involving observeddamage to a specifically protected sensitive resource or areasonable expectation of impending damage.

• Compliance initiatives are situations that do not rise to any of the non-compliance levels mentioned above. This classification is often used todescribe proactive steps taken in response to situations that are not yetnon-compliant but could lead to a non-compliance situation if notappropriately addressed.

Context:Project

ReportableSituations

Reportable EMP Situations

15

One small Project reportable spill took place on land this quarter. Therewere no spills into water or wetland areas.

Spill Events

25 September: Approximately 300 liters of diesel fuel spilled onto a roadsurface from an overturned truck near Mayo Badji in Cameroon. The truckwas transporting Project freight destined for Komé, Chad, and post-accident investigations concluded that the cause of the mishap wasspeeding. A number of initiatives have been launched to manage speeding,including installation of additional speed bumps, speed monitoring, andstepped-up road patrols. The spill was confined to the road and wasproperly cleaned up. No environmental damage was observed.

About 81% of the third quarter’s 16 recorded non-compliance situations fellinto four categories. In order of frequency, the top four categories were:working outside approved areas; socioeconomic issues; erosion control; andwaste management. About three-quarters of the non-compliance situationsrecorded during the third quarter had been rectified and closed out by theend of the quarter.

Working Outside Approved Areas

The six non-compliance situations recorded in this category included casesof clearing vegetation before individual landowners had been compensatedfor use of the land, unauthorized driving by vehicles in a sensitive area,construction of unauthorized temporary pipeline right of way access roads,and storage of excavation spoils outside the pipeline right of way.

Socioeconomic Issues

The three non-compliance situations in this category involved improperhiring practices at worksites, and failure by a contractor to submit arequired monthly business statistics report to COTCO.

Erosion Control

The two non-compliance situations in this category involved dewatering apipeline trench containing muddy rainwater into a stream without firstinstalling adequate erosion and sedimentation control measures, andinitiating earth-moving activities in a flowing river before installingadequate erosion and sedimentation control measures.Waste Management

The two non-compliance situations in this category involved cases ofimproper disposal of kitchen waste and concrete waste.

Spills

Non-ComplianceCategories ofMost Concern

Reportable EMP Situations

16

Four of the 16 non-compliance situations recorded this quarter wereclassified as Level II situations. All of them had been rectified and closedout by the end of the quarter.

• A pipeline lowering crew dewatered a pipeline trench directly into awatercourse at KP255, about three kilometers from Ngaye, Cameroon.The contractor had failed to install adequate erosion and sedimentcontrol measures at the location. Discharge of the muddy rainwater andsome mud into the stream caused a temporary minor disruption of flowin the water course and temporarily increased turbidity immediatelydownstream. Remedial action was taken promptly when the non-compliance situation was detected by monitors. Contractor personnelwere again reminded that they must strictly adhere to the EMPrequirements and procedures at sensitive locations, particularly at waterbody crossings. The contractor assigned a full time EMP Monitor tomonitor pipeline lowering activities. No lasting environmental damageoccurred.

• The pipeline contractor improperly recruited and hired some workers atthe Gadjibian Storage Yard in southern Chad. Monitors discovered thatsome Chadian workers did not have signed work contracts, that thecontractor had recruited some workers at the storage yard gate, and that17 Cameroonian workers at the site did not have work permits from theChadian Ministry of Labor. The pipeline contractor immediately sent allCameroonian workers without work permits back to Cameroon. A planwas then developed and implemented to provide work contracts to theChadian workers who did not have them. A community consultationprogram around the Gadjibian storage yard was also initiated to addressemployment issues.

• A subsequent similar incident involving improper recruitment andhiring practices by the pipeline contractor occurred at Komé, Chad. Thecontractor started recruiting unskilled workers at the gates of KoméBase and the construction site for the Komé central oilfield facility.Consequently, crowds began gathering at the worksites in hopes ofobtaining employment. This improper practice was stoppedimmediately and work on the pipeline in Chad was shut down for fourdays until the employment and recruiting deficiencies could be rectified.

• The pipeline contractor constructed a temporary right of way accessroad (3.5 meters wide and 18 meters long) without prior submission andapproval of an environmental baseline assessment. This access roadadjacent to the Akono River bank near KP868 was constructed to

Level II Non-Compliance

Situations

Reportable EMP Situations

17

shorten the travelling distance between the right of way and the nearbyhighway to Yaoundé. The unauthorized access road was built onpreviously disturbed land, no trees were felled during its construction,and no permanent environmental impacts were observed. The Projectissued orders to immediately close the access road, assess the land forpossible damages, pay damages to any affected individual land users,and to appropriately reclaim the disturbed land.

There were 16 non-compliance situations, 10 compliance initiatives and onereportable spill recorded in the third quarter of 2002. The total number ofrecorded non-compliance situations decreased significantly as compared tothe previous quarter. As noted above, no Level III non-compliancesituations have been recorded since the Project groundbreaking in October2000.

3 Total Reportable Situations by Country3rd Quarter 2002

Level I Level II Level III

TotalNon-Compliance

SituationsComplianceInitiatives

ReportableSpills

Chad 4 2 0 6 1 0Cameroon 8 2 0 10 9 1

Total 12 4 0 16 10 1

3 Non-Compliance Situations by Major Contractor3rd Quarter 2002

Level I Level II Level III TotalDavid Terrassement 0 0 0 0TCC 5 0 0 5Doba Logistics 2 0 0 2Sogea-Satom 0 0 0 0Wilbros Spie Capag 5 4 0 9Pride Forasol 0 0 0 0Schlumberger 0 0 0 0Modec 0 0 0 0

Non-ComplianceSituations &Compliance

Initiatives Tally

Reportable EMP Situations

18

3 Non-Compliance Situations by Category3rd Quarter 2002

Level I Level II Level III Total

Work outside approved areas 5 1 0 6Socioeconomic issues 1 2 0 3Erosion control 1 1 0 2Waste management 2 0 0 2Maintenance/handling ofequipment

1 0 0 1

Health and safety 1 0 0 1Wastewater discharges 1 0 0 1

Total 12 4 0 16

19

Safetyadly, a mechanic who was repairing a worker transport bus was killedin an accident at a Project contractor workshop this quarter. However,

overall workplace safety trends remained positive this quarter. SeveralProject contractors achieved significant safety milestones.

• In Chad, the workers for facilities construction contractor TCCsurpassed the ten million hour mark without a lost time incident.

• In Cameroon, TCC workers have compiled over four-and-one-halfmillion hours without a lost time incident.

• The oil well drilling operation, including prime contractors PrideForasol and Schlumberger, reached the three million safe hoursmilestone.

• Offshore facilities workers in Singapore and Malaysia have tallied overone million safe work hours.

The milestone of ten million work hours without a lost time incident was celebratedthis quarter by the workers of facilities construction contractor TCC in Chad.Rewards for the workers included celebration parties, personal safety achievementawards, incentive gifts, special meals, and time off work.

Section

4S

Safety

20

In addition to these safety milestones, the Project's overall workplace safetytrend indicators remained positive.

• The traffic accident injury rate for the Project continues to be less thanhalf the rate for North American highways. The Project rate is just under55 per 100 million miles driven, compared to the North American rate of116 per 100 million miles driven.

• The Project’s Recordable Incident Rate since construction began is 0.5incidents per 200,000 work hours, much lower than the North Americanconstruction industry average of 8.2 incidents per 200,000 work hours(as of the year 2000, the most recent published figures).

A Cameroonian mechanic working for the Project’s pipeline constructioncontractor died on 4 August as a result of an accident at the Ngoumoucamp’s mechanical workshop. The accident took place as the mechanic wasdirecting a test of some repaired brakes on a worker transport bus. Wheelblocking chocks that had been removed during the work had not beenreplaced before the test, and the vehicle was inadvertently started up whileit was in gear with the clutch engaged. As a result, the bus rolled over themechanic.

The emergency response to the accident was rapid, with a Projectambulance transporting the victim to the nearby construction camp clinic.The clinic doctors ordered emergency air transport to Yaoundé but thepatient died on the way to the hospital.

The victim had received the Project’s standard safety training curriculum.He and his fellow workers attended a departmental safety tool box meetingthe morning of the accident.

Actions Taken

As with all serious accidents, local gendarmes were called to the scene andtook a full report. A rigorous cause investigation was also conducted by theProject.As a result of the accident investigation, the following actions wereundertaken to ensure that the same safe work procedures that are followedon Project-managed sites are also followed in Contractors' camps.

• Pipeline construction on both the southern and northern spreads wastemporarily halted while safety issues were reviewed and reinforcedwith the workforce.

ProjectReportable

Fatal Accident

Safety

21

• Foremen and supervisors were removed from the construction line insmall groups of three and four to receive a four hour training session insafety leadership.

• Pre-task analysis plans were reviewed with the workforce withemphasis on vehicle operation and maintenance issues such as placingchocks behind wheels and making sure fellow workers are clear beforestarting an engine.

• Subsequent daily morning toolbox meetings included reviews of theaccident along with reminders of the potentially fatal consequences ofnot properly following safe work procedures. More specifically,requirements for placing chocks behind the wheels of parked vehicleswere emphasized.

One workplace lost time incident was recorded in the third quarter. Thedriver of a bulldozer injured his leg when it was caught between thebulldozer and a sled while connecting the two units together.

A total of 11 medical and restricted work cases were recorded during thethird quarter by the Project, including the previously described fatality.

Vehicle accidents causing light or alternative work duties represented 70%of the seven restricted work cases. The remaining cases were associatedwith improper lifting practices resulting in aches and strains that requiredalternative duties.

Three medical treatment incidents required stitches due to cuts resultingfrom the use of sharp objects or pinched fingers.

Traffic accidents are the leading contributor of serious accident cases to theProject’s safety performance statistics and, as a result, traffic safetycontinues to be the number one priority for accident prevention efforts.

Senior management representatives for each of the Project’s primecontractors gathered for a traffic safety summit conference this quarter inN’Djaména to share and learn vehicle accident prevention techniques. Someof the successful safety initiatives reported at the meeting include:

• Statistical analysis of vehicle accident locations, and aggressivecounseling of drivers to be extra cautious on high accident rate roadsegments.

• Placing of extra bright and large road warning signs at high accidentrate locations.

Lost TimeIncidents

Restricted WorkCases & Medical

Treatments

Context: ProjectTraffic SafetyPerformance

Safety

22

• Banning subcontractor truck fleets and their drivers if they display highrates of mechanical or discipline problems.

• Greater use of speed control mechanisms such as speed bumps, speedmeasuring radar guns, and road patrols.

• Preventing after hours and nighttime vehicle operation byimplementing journey management techniques such as key hand-inrequirements, vehicle logs at gates, and hourly village patrols for Projectvehicles.

Fortunately, these and other prevention efforts have been yielding somegood results. The latest traffic performance statistics show that the totalnumber of Project-related traffic accidents has been trending downwardsover the past several months. This improvement has been achieved eventhough the Project operates in a traffic environment filled with risk factorssuch as unpaved roads, ox carts and nomad cattle herders, and torrentialseasonal rains.

3 Evolution of Traffic Accidents

This graph shows the steady decline in accidents involving vehicles operated bythe prime construction contractor for the fixed facilities in the oilfield area and atthe pump stations in Cameroon. This improvement was achieved even as the totalnumber of vehicles operated by the contractor climbed by several hundred to morethan 1,000.

10

6

43 3

7

9

1014Vehicles1014

942873

794791736

0

3

6

9

12

Mar-02 Apr-02 May-02 Jun-02 Jul-02 Aug-02 Sep-02

Num

ber

of A

ccid

ents

Number of Accidents Number of Vehicles

Safety

23

3 DRIVING SAFETY

The Project’s overall traffic accident injury rate, shown on the left, comparesfavorably to the rates in a number of industrialized countries that have betterquality roads and less challenging driving conditions as compared with those in theProject area.

The reportable Project safety statistics presented in the first table below arefor EEPCI/TOTCO/COTCO and their direct prime contractor workers. Aspreviously mentioned, for workplace accidents, the Project uses the UnitedStates Occupational Safety and Health Administration (OSHA) standards asa reference for recording and reporting accidents and injuries, even thoughthe activities occur outside of the United States.

3 Project Reportable IncidentsIncidents involving a location, property or activities owned, controlled or supervised by the Project or itscontractors.

1stQtr

2ndQtr

3rdQtr

Year2002

SinceConstruction

Began (Oct 2000)Fatalities 0 1 1 2 3Lost Time 1 3 1 5 11Restricted Work 8 6 7 21 61Medical Treatment Required 11 11 4 26 46First Aid Cases (construction related)

188 166 126 480 1,191

Worker Hours (millions) 8.41 10.59 8.81 27.81 29.19

Quarterly SafetyStatistics

0

0.5

1

1.5

2

Finlan

d

Denmark

New Ze

aland

Franc

e

Swed

enIre

land

Norway

Greece

Netherl

ands

Chad P

rojec

t

Icelan

d

Switze

rland USA UK

Belgium

Austria

German

y

Czech

Rep

ublic

Japa

nTu

rkey

Tra

ffic

Acc

iden

t In

jury

Rat

e (P

er 1

Mill

ion

km

's D

rive

n)

Safety

24

Trend AnalysisRecordable Incident Rate* 0.48 0.38 0.30 0.39 0.5Lost Time Incident Rate* 0.05 0.05 0.05 0.05 0.05

*per 200K worker hours

3 Traffic Safety Tally

1stQtr

2ndQtr

3rdQtr Year

2002

SinceConstruction

Began (Oct 2000)

Traffic Accidents 32 58 20 110 209

3 Manhours SpentRecordable Incidents

3rd Qtr 2002

Chad 2.9 Million man-hours 3

Cameroon 6.0 Million man-hours 10

These Chadian Project firefighters received training this quarter in the use ofspecial breathing apparatus, required for some confined space rescues and certainfire fighting situations.

Training

25

Consultation & Communicationore than 500 public consultation sessions took place in the thirdquarter of 2002, reaching more than 13,500 people.

Issue: Discussions continued this quarter on the disposition of atemporary bridge built by the pipeline constructioncontractor over the Lom River. Nearby residents and thegovernment of Cameroon have made strong requests thatthe bridge be left in place.

As indicated in the previous Quarterly Report, a process hasbeen devised to resolve issues relating to the disposition oftemporary facilities built to support construction. TheProject’s prime contractors have started leaving work sites,and at many locations, the nearby residents want thetemporary facilities to remain in place.In this case, the Lom River bridge, if left in place, wouldprovide poaching, logging and potentially developmentaccess to a designated environmentally sensitive area northof the river. Leaving the bridge in place would require theProject to violate its legally binding commitment under theEnvironmental Management Plan to remove temporaryriver crossings in designated environmentally sensitiveareas. In addition, over time, the bridge could becomeunsafe if it is not properly maintained. A legal liability forthe Project could also arise if the bridge was implicated inan accident in the future.

Action: Project representatives participated in a meeting in July inYaoundé involving all the stakeholders, includingrepresentatives of local communities, Camerooniangovernment ministries, the World Bank, and others. At themeeting, the Project indicated that it is willing to leave thebridge in place, but only if safety, environmental, and legalissues could be resolved. Legal indemnification would also

Section

5M

Cameroon Issues& Actions

Consultation & Communication

26

be required before the bridge could be left in place, and theLender Group and the government of Cameroon wouldhave to formally release the Project from its EnvironmentalManagement Plan obligations in writing. The World Bankrepresentative at the meeting clearly stated that the Projectis bound to comply with the provisions of theEnvironmental Management Plan regarding this matter.As a follow up to the meeting, the Prime Minister ofCameroon wrote a letter to the World Bank requesting thatthe bridge be left in place. A World Bank Director withresponsibility for the issue has replied that the bridge mustbe removed in accordance with the provisions of theEnvironmental Management Plan. However, the BankDirector indicated in the letter that the Bank understandsthe concerns of the communities near the bridge and hesuggested that mechanisms could be explored to meet theexpressed river crossing needs in some manner other thanleaving the temporary bridge in place.

This aerial photo of the Lom River shows the temporary vehicle bridge built tosupport pipeline construction activities. The bridge will be removed by theProject in compliance with the Environmental Management Plan to preventvehicle access by poachers and loggers into the designated sensitive wildlifehabitat located to the north of the river. Since trains run infrequently in thislocation, the existing adjacent railway bridge (right) is often used as afootbridge by local residents to cross the river.

Consultation & Communication

27

Issue: A series of road and bridge blockades repeatedly haltedwork during the quarter as pipeline construction advancedthrough a populous area in the vicinity of Yaoundé.Demonstrators, realizing that much of the Project’s mostlabor-intensive construction efforts will end in Cameroon inearly 2003, took advantage of the passing pipelineconstruction work to press their demands for money andjobs.

Action: The Project mobilized a special team to the area and theteam conducted consultation meetings in 38 Yaoundé-areavillages. The team heard the concerns of the people andprovided information on the Project’s commitment to localhiring and how the hiring had been done in the area,including the number of people who received jobs throughthe local hiring program. The team also highlighted thefour-step consultation-driven process for compensatingindividual land users directly impacted by Projectconstruction activities, as well as the consultations that haverecently taken place for the community and regionalcompensation program. (For more on community andregional compensation, see the section on Compensation.)

In one particular case, some individual landowners andusers complained that compensation payments were late forsmall plots of additional land that had been temporarilydisturbed during pipeline construction. Their concerns wereinvestigated and it was found that some payments wereindeed late by a month to six weeks due to administrativeissues. Payments of the outstanding compensation wereexpedited and arrangements have been made to providemore rapid processing of future individual compensationpayments for temporary land disturbances.

Issue: The people of Komé Atan have been asking for assistancefrom the Project to address various community issues.Komé Atan is a settlement of job seekers and opportunisticmerchants that has developed across the road from theProject’s Komé Base Camp in the oilfield area. Thesettlement sprang up about eight years ago and, over theyears, the population of the settlement has fluctuated inresponse to the local level of Project activity.

Chad Issues &Actions

Consultation & Communication

28

Action: An action plan has been drawn up to address some of theconditions in the settlement. Work started on the followinglist of items as the quarter was drawing to a close:- Installation of two new water wells.- Replacement of the open ditch along the road in front of

the settlement with a covered drainage system.- Collection of paper, plastic bottles, and sheet plastic.

Youths collecting these materials will be rewarded withschool supplies.

- Initiation of mosquito fogging in the village.- Installation of lighting within the drilling camp to light

the roadside area of the settlement and improve safetyand security.

- Construction of a simple, organized truck parking areaoutside of Komé Base Camp.

In addition, as described in the previous Quarterly Report,Project employees have raised a small fund to create andsupport a school in the community.The government of Chad has agreed to conduct a villageplanning process and other long-term steps to manageKomé Atan as provided for in the Republic of Chad’sRegional Development Plan.

More than 13,500 people attended over 500 Project-sponsoredconsultation sessions during the third quarter of 2002.

3 Consultation MeetingsSessions Attendees

Chad 186 4,061Cameroon 325 9,887

Quarterly Total 511 13,948

Tabulation ofConsultation

Activities

Training

29

Compensations of the end of the third quarter of 2002, the Project has paid over6.2 billion FCFA ($9.6 million) in cash and in-kind compensation

to individual land users, with over 573 million FCFA ($882 thousand)added to the total this quarter.

In addition to the payment of individual land user compensation, theProject's Environmental Management Plan specifies supplementalcompensation programs for each of the host countries.Cameroon

In Cameroon, the supplemental compensation programs are calledcommunity and regional compensation. These programs are meant toaddress the more diverse and geographically dispersed impacts relatedto the construction and operation of the oil transportation pipeline, thetwo pump stations, and the Pressure Reducing Station that have notbeen dealt with under the Project’s individual compensation program.

By the end of the third quarter, the residents of the 230 of the eligible240 villages and 25 of the eligible 26 arrondissements had selectedimprovement projects following a multi-step consultation process.Delivery of products and the construction of improvements has beenscheduled to start in early 2003. Some of the selected projects includeschools and school improvements, clinics and clinic improvements,water wells, agricultural supplies, and various types of communitybuildings.

Some communities have chosen projects that will require ongoingmanagement or maintenance (e.g., grain grinders, community halls,agricultural tools, etc.). Such communities will select four or fiverepresentatives to serve on a management committee which will ensurethe sustainability of the chosen improvement projects. A trainingprogram has been set up to make sure that the management committeesare prepared to maintain their community’s project in the years ahead.Seven Cameroonian NGOs have been selected through a competitivebidding process to deliver this training program. The Project begantraining the chosen NGOs as the third quarter was ending. Following

Section

6A

RegionalCompensation

Status

Compensation

30

their own training, the NGOs will conduct half-day training sessions atthe community level for the community management committees.

Chad

In Chad, the supplemental compensation program is referred to ascommunity compensation. This program is designed to compensate forimpacts associated with the construction and operation of permanentProject facilities including the oil wells, the oil processing facilities, andthe oil transportation pipeline that have not been dealt with under theProject’s individual compensation program.

GTZ, the NGO contracted by the Project to manage the communitycompensation program in Chad, carried out the initial round ofconsultations this quarter, conducting at least one session with each ofthe 68 eligible villages. Five of the 68 villages have selected their micro-development projects but most of the villages have not yet reached thestage where they can come to a consensus. The consultations with thesevillages have revealed some confusion about the nature of the programand that confusion will be addressed through further consultationsessions.

The off-farm training and improved agriculture programs arealternatives that the Project offers to farmers who are eligible forresettlement but would rather not move.

Off-Farm Training

A total of 15 people have chosen the off-farm training option under theProject's resettlement program since the second phase of oilfield arealand user compensation program began in 2001. These individuals arestanding by for their training programs to begin. Proposals have beensolicited from training institutions to provide the required occupationalinstructions, and eight of them have responded. The proposals arecurrently being evaluated.

In addition four individuals have already started their off-farm trainingprograms, having chosen to receive on the job training while workingon the Project construction effort. Their supervisors report that they aremaking good progress.

Improved Agriculture

Sixteen agricultural cooperative groups have been formed in ten oilfieldarea villages, and these cooperatives form the basis for the improvedagriculture program. The groups are open to all local individuals, not

ImprovedAgriculture & Off

Farm TrainingResettlements

Options

Compensation

31

just the farmers eligible for the training under the Project's resettlementprogram.

During the just ending rainy season, members of the cooperativesplanted improved varieties of corn, peanuts, and sesame. They alsoplanted mucuna beans as ground cover and for seed multiplication.

Each cooperative has chosen a technical delegate to receive training inleadership and agricultural techniques. These leaders will then pass ontheir knowledge to their respective group.

3 Individual Compensation Paid This Quarter(Millions FCFA)

Road Related Pipeline/OFDA Related Total Project To DateChad 14.5 160.5 175.0 1699.1Cameroon 4.4 394.2 398.6 4537.1

Project Total 18.9 554.7 573.6 6236.2 Data for previous quarters has been updated to include late reported data.

IndividualCompensation

Tabulation

Compensation

32

Training

33

EMP Monitoring &Management Program

his quarter saw significant advances in the preparation of theProject’s six area-specific oil spill response plans. Also this quarter,

the archaeology teams completed their survey of the northern pipelineconstruction spread.Final steps are underway to complete the Project's oil spill responseplanning process, an essential task before commencing the productionphase, when oil will begin flowing in the pipeline. All six of the Project’sarea-specific oil spill response plans were nearly ready for public reviewas the quarter was closing. Public information and consultationmeetings to discuss the plans will be held in communities throughoutChad and Cameroon in the fourth quarter.Preparation of the area-specific oil spill response plans culminates aprocess that has, in a sense, been underway since planning began for theProject in 1993. From the very beginning, the Project was designed, andis now being constructed, to prevent oil spills and to limit the damage if,despite all the precautions, a spill were to happen. (For moreinformation on this topic, see Context: Preventing & Detecting Oil Spills inthis section.)The area-specific oil spill response plans build on the Project’s GeneralOil Spill Response Plan, the Environmental Management Plan, theEnvironmental Assessment, applicable host country legislation, anextensive body of oil spill response research and technology, andinternationally-recognized standards for oil spill response and clean up.Areas Covered

The area-specific oil response plans divide the Project area into sixgeographic sections.

• The oilfield area in southern Chad.

• Four pipeline maintenance areas, one in Chad and three inCameroon.

Section

7T

Oil SpillResponsePlanning

EMP Monitoring & Management Program

34

• The offshore marine terminal near Kribi, Cameroon.

The six plans have been organized around the specific nature of theProject's activities in each area, and thus the types of spills that couldpotentially occur in each locale. Logistics considerations also come intoplay so that spill response equipment and other resources can be bestpositioned to allow for a rapid and effective response in the unlikelyevent of a sizeable spill.

This map shows the locations of the four pipeline maintenance areas, plus theOilfield Development Area in southern Chad, and the offshore marine terminalnear Kribi, Cameroon.

Plan Contents

Each of the area-specific oil spill response plans contains all of theadvance planning information necessary to stop, contain, and clean up aspill.

• Pre-arranged incident command assignments and response teamorganizations for each level of spill, from Tier 1 (small) through Tier3 (large), as well as 24 hour contact information.

• A system for making notifications to local residents, host countrygovernments, and other key stakeholders.

EMP Monitoring & Management Program

35

• Site specific scenarios and tactics for the most likely types of spillsituations that could occur in each area (e.g., river or stream, coastal,land-based, etc.). Scenarios and tactics provide guidance on the bestlocations to place oil containment equipment such as booms, as wellas locations of and travel times to the nearest spill responseequipment caches, and logistics support details.

• Site-specific tables of sensitive areas for priority protection.

• Steps for preventing wildlife from coming into contact with spilledoil, and for treating animals that do.

• Health and safety protection procedures for spill responsepersonnel.

• Training for the personnel who would need to use spill responseequipment and the incident commanders who would need toimplement the plans.

• Detailed checklists for all the logistics and support functions for anoil spill response effort, including accommodations, transportation,food, and medical care.

The plans also define systems for calling on the international spillresponse system that has been established by the internationalpetroleum industry. The system maintains warehouses of Tier 3 oil spillresponse equipment at key locations around the world, ready to bedispatched on a moment’s notice if a spill should develop into anemergency that exceeds the equipment and staff resources stationedwithin a particular country (a Tier 3 response).

EMP Monitoring & Management Program

36

This tactics sheet dem

onstrates some of the detailed planning that has gone into the P

roject's six area-specific oilspill response plans. T

he yellow and orange arrow

s on the pictures across the top of this tactics sheet indicate where

the best locations on the M'béré R

iver, near the pipeline crossing, are for positioning booms to contain spilled oil.

EMP Monitoring & Management Program

37

The Project has establishedcaches of oil spill responseequipment at strategiclocations in the oilfield area,along the pipeline route, and atthe marine terminal. Amongother items, the equipmentincludes booms, all-terrainvehicles, absorbent materials,skimmers, and pumps.

This depot is one of several setup around the world by theinternational petroleum industryto ensure that enough oil spillresponse equipment isavailable in the event of amajor spill. The depots can flythe material to even theremotest of locations on amoment’s notice.

Oil spill response training hasbeen underway throughout theProject’s construction phase.Periodic training exercises likethis one will continue during theproduction phase to make surethat spill response teams knowhow to effectively use theavailable equipment.

EMP Monitoring & Management Program

38

The Project has taken the position that the best way to “respond” to anoil spill is to take all feasible and practical measures to ensure that aspill will not happen in the first place. Prevention and detectionmeasures have been built into the entire Project, from the oilfields insouthern Chad, to the 1,070 kilometer long pipeline, to the offshoremarine terminal near Kribi, Cameroon. The following list outlines someof these measures.

Pipeline

Routing: Pipeline routed away from designated nature reserves; routelimits habitat damage by paralleling, where practical, existing roadsand railroad tracks and traversing previously disturbed areas;pipeline route minimizes the number of watercourse crossings.

Manufacture: Pipe manufactured of high quality steel and constructed tointernationally recognized standards.

Testing: Radiographic testing of 100% of pipe welds at the factory andin the field to search for hidden defects (far in excess of internationalstandards requiring the sampling of only a small percentage ofwelds); pressure testing of the entire pipeline before oil flows.

Corrosion Protection: Corrosion resistant coating applied to the entirepipeline; installation of a cathodic protection corrosion preventionsystem.

The entire pipe has been coated with a combination of resin and plastic. Thiscoating, along with other measures, protects against corrosion and thus helpsprevent a leak from developing.

Context:Spill Prevention

& Detection

EMP Monitoring & Management Program

39

Physical Protection: Entire pipeline buried approximately one meterbelow ground to protect it from third party damage or sabotage; extrathick-walled pipe installed at watercourse and road crossinglocations; pipe weighted and protected with concrete coating inwetlands and at river/stream crossings.

These workers are lowering a section of welded pipe into the trench. Once inthe trench, it is covered with a one-meter thick protective layer of earth.

EMP Monitoring & Management Program

40

At locations where the pipeline crosses a waterway, the pipe has been coatedwith concrete to weigh it down and provide extra protection against damage.The design also calls for the use of thicker walled pipe at water body and roadcrossings. The inset shows all three types of pipe protection coatings: greenepoxy resin, black plastic, and concrete.

Emergency Control & Shutdown: Sophisticated, computerized controlsystems installed at the Komé control center; existence of anadditional pipeline control center at Pump Station 2; pipelineshutdown valves located at major water body crossings, many ofthem remotely controlled.

Leak Detection: Control rooms equipped with a state-of-the-artcontinuous computerized pipeline integrity monitoring system thatcomplies with international standards; anomalies trigger automatedalarms.

Control room technicians monitor the integrity of the pipeline using asophisticated computerized leak detection system that continuously tracksdata from sensors throughout the system. From the control room, immediateaction can be taken to limit the size of an oil spill in the event of a leak.

EMP Monitoring & Management Program

41

Inspections: Periodic aerial and ground inspections of the pipeline rightof way to look for leaks or potential pipeline damaging activities; on-going internal cleaning and inspection of the pipeline.

Offshore Marine Terminal

Rapid Response Systems: Constant communications between theFloating Storage and Offloading vessel and the pipeline controlcenter; emergency alarm and shut-down system; Pressure ReductionStation aids emergency shut down.

Collision Avoidance: Service and patrol boats maintain safe perimeteraround the Floating Storage and Offloading vessel during crude oiloffloading operations; state-of-the-art marine communicationssystems and long-range radar for collision avoidance installed onboard the Floating Storage and Offloading vessel; use of a tandemvessel mooring system, ensuring a safe distance between the FloatingStorage and Offloading vessel and a visiting export tanker.

Physical Protection: Concrete coating of the subsea pipeline; single-point mooring assembly allows the Floating Storage and Offloadingvessel to swivel into the most favorable orientation during stormconditions.

Anti-Pollution Measures: Floating Storage and Offloading vesselequipped with segregated ballast tanks to ensure that sea water usedfor ballast does not come into contact with stored crude oil; redundantmonitoring of discharged water quality.

Crew Expertise: Specially trained and certified crew overseeing theoperation of the Floating Storage and Offloading vessel.

Oilfield Development Area

Corrosion Protection: Corrosion-proof fiberglass pipe used for flowlinepiping; anti-corrosion coating applied to all metal pipe; cathodicprotection system installed on trunk lines; periodic internal inspectionprogram to detect problem areas.

Physical Protection: Burial of flow lines, gathering lines, and trunk linesin the oilfield area; berms installed around tanks and facilities tocontain spilled oil in the event of a leak.

Rapid Response Systems: Wells equipped with high and low pressuredetectors and automatic shutdown devices; shutdown valves locatedat key locations on crude oil flow and gathering lines, includingsignificant water body crossing locations; storage tanks fitted with

EMP Monitoring & Management Program

42

sensitive radar-based technology to detect any unplanned drop inliquid level.

Anti-Pollution Measures: Oily rain water runoff captured and oilremoved prior to being discharged at the central oilfield facility andthe three gathering stations.

A Project-funded wildlife conservation education program began this quarter inthe Bélabo area in Cameroon. The program is being conducted by the LimbéWildlife Center under contract to the Project. One of the primary educationaltools is a theatrical production set right in the village. The play points out theimportance of preserving animals, especially primates, for the village’s futurewell being. It also points out the conflicts that occur between villagers as theycompete for increasingly rare game.

The pre-construction archaeological survey was completed this quarterfor the northern construction spread of the pipeline. Also, inpreparation for the pipeline construction work entering Chad, theChadian archaeological team journeyed to Cameroon and joined theirCameroonian counterparts to learn more about techniques foreffectively monitoring pipeline construction activities.

• So far, the archaeology teams have surveyed about 700 km of thepipeline right of way and they have discovered nearly 270

WildlifeConservation

Archaeology

EMP Monitoring & Management Program

43

archaeological sites. The sites vary in age, showing that humanshave ranged widely over the Project area, from forest to savanna, formany thousands of years.

Era Age SitesStone Age 3,000 to more than 15,000 years old 28Neolithic/Iron Age 1,000 to 3,000 years old 94Iron Age/Recent Less than 200 to 1,000 years old 142Undetermined age 10

• Thirty-seven of the discovered sites are considered high priority, and15 of them have already been excavated.

The Project’s archaeological surveys and monitoring effort takentogether constitute the largest archaeological program ever undertakenin Central Africa, enabling archaeologists access to normallyinaccessible areas, and resulting in significant contributions to theknowledge of Chadian and Cameroonian prehistory.

All archaeological material collected by Project scientists belongs to thepeople of Chad and Cameroon. The material will be handed over to therespective government ministries at Project completion.

EMP Monitoring & Management Program

44

Training

45

Local Employmenthe size of the Project’s direct workforce increased again this quarterto a total of 12,474 individuals, about 60% higher than the originally

predicted peak number of 7,000. Layoffs by contractors demobilizingfrom the road upgrade project and the northern portion of theCameroon section of pipeline were counterbalanced by intensifiedconstruction worker hiring in the oilfield area, at the pump stations, andfor the Chadian portion of the pipeline construction effort.Included in the Project's expatriate workforce in Chad is a significantnumber of skilled workers from the Philippines. Facilities constructioncontractor TCC has brought these workers into Chad with the assistanceand approval of the National Coordination of the Republic of Chad andONAPE (Office Nationale d'Appui a la Promotion de l'Emploi) in orderto accelerate the pace of construction and ensure that oilfield areafacilities are built in accordance with the Project's rigorous qualitystandards.Wages paid to Chadian and Cameroonian workers in the third quarterof 2002 reached nearly 6.6 billion FCFA (over $10 million).

• Total wage payments to Cameroonian workers were just under 3.7billion FCFA (approximately $5.7 million).

• Total wage payments to Chadian workers were nearly 2.9 billionFCFA (approximately $4.4 million).

• Over 58% of the Project’s Chadian and Cameroonian workers workin skilled or semi-skilled job categories. An additional 4% holdsupervisory positions.

Section

8T

Local Employment

46

3 End of Quarter Workforce Tally (Rolling 12 Months)

4th Quarter2001

1st Quarter2002

2nd Quarter2002

3rd Quarter2002

Chad Nationals 2,933 3,654 4,090 4,166 Expatriates 889 760 1,261 1,751

Total Chad 3,822 4,414 5,351 5,917

Cameroon Nationals 5,427 5,844 5,645 5,796 Expatriates 647 690 761 761

Total Cameroon 6,074 6,534 6,406 6,557

Project Total 9,896 10,948 11,757 12,474

3 National Employment Level Trends by Country

5,7965,645

5,8445,427

0

1,400

2,800

4,200

5,600

7,000

4Q2001 1Q2002 2Q2002 3Q2002

Nu

mb

er o

f Nat

ion

al W

ork

ers

Cameroon Employment (Nationals)

LocalEmployment

Tabulation

Cameroon

Local Employment

47

4,1664,090

2,933

3,654

0

1,000

2,000

3,000

4,000

5,000

4Q2001 1Q2002 2Q2002 3Q2002

Nu

mb

er o

f Nat

ion

al W

ork

ers

Chad Employment (Nationals)

3 End of Quarter Employment Level Categories(National Workers Only)

Supervisory Skilled Semi-Skilled UnskilledChad 142 2,427 573 1,024Cameroon 302 1,423 1,383 2,688

Project Total 444 3,850 1,956 3,712

The majority of Chadians and Cameroonians hired by the Project are workingin skilled or semi-skilled jobs. Skilled jobs include archaeological aides, two-way radio repair technicians, and welders. Semi-skilled jobs include foodservice assistants and janitorial staff for example. Together, these twocategories amount to about 60% of the National workforce assembled for theProject.

Chad

Supervisory4%

Skilled39%

Unskilled37%

Semi-Skilled20%

Local Employment

48

Training

49

Local Business Developmentroject expenditures during the third quarter of 2002 with Chadianand Cameroonian suppliers of goods and services totaled

approximately 65.0 billion FCFA (over $99 million), an increase ofapproximately 9% over the previous quarter.

• In Chad, Project spending with local businesses increased by 20%this quarter to 33.0 billion FCFA (over $50 million).

• In Cameroon, Project spending with local businesses remainedsteady this quarter at 32.6 billion FCFA (over $50 million).

3 Project Spending with Local Businesses

4th Qtr 2001 1st Qtr 2002 2nd Qtr 2002 3rd Qtr 2002% Change

Qtrs 2nd to 3rd Project To DateChad 14.1 billion CFA

($21.7 million)24.6 billion CFA

($37.8 million)27.5 billion CFA

($42.3 million)33.0 billion CFA

($50.6 million)20% 123.6 billion CFA

($190.0 million)Cameroon 22.0 billion CFA

($33.8 million)28.1 billion CFA

($43.2 million)32.6 billion CFA

($50.2 million)32.6 billion CFA

($50.2 million)0% 163.1 billion CFA

($251.0 million)

ProjectTotal

36.1 billion CFA($55.4 million)

52.7 billion CFA($81.0 million)

60.1 billion CFA($92.6 million)

65.6 billion CFA($100.8 million)

9% 286.7 billion CFA($441.0 million)

This table was prepared using the latest available data. Data for previous quarters has been updated to include late reported data.

Section

9P

Local BusinessExpenditureTabulations

Local Business Development

50

3 Project Spending with Local Businesses Compared toProject Activity (Indicated by Total Project Workers on the Job)

65.660.1

36.1

52.7

31.6

12,474Workers11,757

10,9489,896

7,559

0

20

40

60

80

3Q2001 4Q2001 1Q2002 2Q2002 3Q2002

CF

A in

Bill

ion

s

Training

51

Trainingver 2,400 Project worker training sessions were held during thethird quarter of 2002, covering an array of categories including

new worker safety, health, environment, and orientation sessions,classes in construction trade crafts, and high level skills training fortrades such as carpentry and electrical work. The number of trainingsessions increased slightly as compared to last quarter, growing byapproximately 16%. The increase was due in part to a rise in high skillstraining, which increased to a total of 1,472 training sessions for thequarter.

Medikounan Rohity has been working as a trainee medical technician at acontractor medical clinic in the Komé area. Here he performs a diagnostic testfor malaria as part of his on the job training program.

All new construction workers who will be on the job for more than twoweeks receive ten hours of training on safety, health, and theenvironment, and they are also informed about the Project’s policies

Section

10O

TrainingTabulation

Training

52

regarding alcohol, drugs, firearms, hunting, poaching, and bush meat.In addition, many workers receive additional craft and skills trainingsuitable to their assignments.

3 Contractor Training Levels for 3rd Quarter 2002New Hire

SHE &Orientation

BasicCraft

HighSkills

Cameroon

Sessions 430 73 377Persons 4,024 910 2,914

ChadSessions 287 227 1,095Persons 1,722 2,284 1,030

Sessions Total 717 300 1,472

Persons Total 5,746 3,194 3,944This table was prepared using the latest available data. Some contractor figures had not yet been submittedas this report was being prepared.

The Project’s facilities contractor has commissioned special skills training forpotential workers at six existing schools in Chad, funding improvements at theschools as needed to improve their standard of instruction. Among severalother skills courses, the school CETIN in Sahr, Chad, teaches students tobecome electricians. Students who pass the course, with tuition funded by thecontractor, are potentially eligible for Project-related jobs.

Training

53

Worker Healthew malaria fighting procedures went into effect this quarter, aresponse to the particularly dangerous form of the malaria

parasite found in Chad and Cameroom (Falciparum malaria).

The Project’s new malaria prevention initiative, described in itsplanning stages in the previous Quarterly Report, has now beenlaunched and is in full operation.

The Malaria Chemoprophylaxis Compliance Program (MCCP)augments the Project’s ongoing comprehensive Malaria ControlProgram. It affords greater protection to non-immune workers bymaking sure they properly take effective anti-malaria medication.

• Non-immune workers are required as a matter of policy to take aneffective anti-malaria medicine.

• A comprehensive briefing program emphasizes the risks to non-immune workers who fail to properly take one of the effectivemedications.

• The Project conducts random, unannounced, and periodic testing ofindividual non-immune workers to verify that they are taking therequired malaria prevention medicine.

• Medical evaluation and counseling are required for those workerswith test results indicating non-compliance with the Project’schemoprophylaxis requirements. This medical follow up focuses onaddressing potential individual medical issues associated with therequirement for taking one of the effective anti-malaria medications.The medical evaluation process may determine that a worker is notable to safely work in the Project area, even with the worker’s fullcooperation and efforts to establish and maintain measurable levelsof protective medication in his or her body. Reassignment maytherefore be the best course of action for the well-being of theindividual.

Section

11N

Context:Malaria Prevention

Initiative

Worker Health

54

It is important to note that only non-immune Project workers need totake anti-malaria medication. Workers who were born in and havegrown up in the Project area are semi-immune to the malaria parasiteand taking the medication could damage their natural protectionagainst the disease. The semi-immune workers, who should not takeanti-malaria medication, are individuals from Subsaharan Africancountries excluding South Africa.

As part of the Project’s new anti-malaria initiative, workers are selected atrandom to submit urine specimens for testing (left). The specimens areshipped to a laboratory in Scotland (upper right) and tested to verify a non-immune worker’s compliance with the Project's requirement to take one ofthree effective anti-malaria medications.

Worker Health

55

An important part of the Project’s anti-malaria program is the removal ofmosquito breeding habitat. In this photo, workers are removing standing waterso it cannot serve as a breeding ground for malaria-bearing mosquitoes.

Project clinics provided nearly 17,500 worker visit consultations duringthe third quarter of 2002, about 40% of them in Chad and 60% inCameroon.

3 Third Quarter 2002 Project Worker Health Data

Malaria STDsSSS* Events

(excluding Malaria & STDs) Hospitalizations MedevacsChad 45 78 26 3 2

Cameroon 68 264 100 40 4

Project Total 113 342 126 43 6*SSS: Early warning system used to identify changes in disease rates. Some examples of diseasescovered by the SSS include gastrointestinal, dermal and respiratory diseases.

Worker HealthTabulation

Worker Health

56

57

Community Healthommunity health initiatives for the third quarter included supportfor a new clinic to serve the communities in the vicinity of Pump

Station 2, as well as continued support for Roll Back Malaria andSTD/HIV/AIDS education campaigns.

The Project has provided a building, examination room furniture, basic start-upmedical supplies, and electricity for an interim clinic in the Dompta area, nearPump Station 2 in the highlands of northeastern Cameroon. The clinic replacesthe good Samaritan health care that had been provided by the Project's roadupgrade contractor at its construction camp, which has been shut downfollowing the contractor's demobilization.

Cameroon

Project-sponsored HIV/AIDS awareness sessions were held inNgoumou, Batchenga, and Bemboyo. The ongoing STD/HIV/AIDS

Section

12C

HIV/AIDS & STDs

Community Health

58

awareness program for the Project’s truck drivers also continued thisquarter in Douala and Ngaoundal. The Cameroonian NGO partnersinvolved in these awareness campaigns included LLEFE, CRAGERNA,and CAMNAFAW.

Chad

A screening program for curable STDs was undertaken in Komé villagein the oilfield area. Nearly 200 villagers were screened and about one-quarter of them received antibiotic treatment. All screened individualsreceived STD/HIV/AIDS educational materials and condoms. Similarcurable STD screening programs have previously been conducted atKomé Atan, Bam, Bitoye, Sakara, and Bedia.

The Project has agreed to provide some support for the government ofChad’s new HIV/AIDS prevention program: Le Projet de Lutte ContreVIH/SIDA/IST Sur La Zone D’Eploitation Petroliére. The Project hadbeen fostering a similar effort in partnership with the Chadian NGOAMASOT, but that effort has now been rolled into the government’sprogram. The Project has contributed funding and other support to thegovernment program, including providing educational billboards, carkey chains with condom pouches, and women's skirts with HIV/AIDSeducational messages printed on them.

Chad

A second shipment of 12,000 anti-mosquito bed nets has arrived inChad and their distribution is underway. So far, almost 30,000 bed netshave been distributed in villages throughout the oilfield area and alongthe Project-upgraded road in southern Chad.

About 108,000 people, around half of them children, have attendedvillage anti-malaria education programs put on by the Chadian NGOpartners in the program, AMASOT and ACODE.

Cameroon

COTCO will provide bed nets and financial support for the Roll BackMalaria campaign in Cameroon. Organizational meetings this quarterprepared the way for the arrival of the Cameroon shipment of anti-mosquito bed nets. The Cameroonian NGO Cass will conduct the fielddistribution of the bed nets and will provide village education programsto ensure that they are used effectively. The Cameroonian Ministry ofHealth will train the NGO's field workers involved in the program.

Roll BackMalaria

59

Waste Managementhe quantity of non-hazardous waste managed by the Projectincreased again this quarter, by just over 1%. About 50% of the

Project’s non-hazardous waste was recycled to villages or sent toapproved recycling facilities.

A Komé Waste Management Team was created this quarter to overseeall waste management activities in the oilfield area and to make themost efficient use of existing and future waste management facilities.

The new team has established a centralized waste management area forthe Project’s Komé-area operations. Staff and equipment have beenassembled to attend to the area’s significant waste managementchallenges.

This worker operates a shredding machine at the Project’s new Komécentralized waste processing facility. By shredding plastic drinking waterbottles into small pieces, the volume of this type of waste can be significantlyreduced.

Section

13T

Komé WasteManagement

Team

Waste Management

60

Until the permanent waste management facilities have beenconstructed, the Project will continue to store its non-recyclablehazardous wastes in safe, leakproof containers. At the end of the thirdquarter, in excess of 500,000 kilograms of hazardous waste was instorage.

The bulk of the waste that has technically been classified as hazardousand is in storage consists of commonplace materials such as usedlubricating oils, hydrocarbon-contaminated soil, lubricating oil filtersfrom vehicles and construction equipment, and batteries.

3 Non-Hazardous Waste TabulationKilograms

Domestic GarbageIncinerated On Site

485,135

Innocuous Solid WasteBuried on Site

339,043

Recycled to LocalCommunities

798,537

Sent to Approved ThirdParty Facilities

36,561

Total 1,659,276Weight estimates in this table have been derived from defined waste-specific weight standards for individualtypes of containers.

Storage ofHazardous

Waste

WasteManagement

Statistics

61

Environmental Foundationhe Foundation for Environment and Development in Cameroon(FEDEC) has chosen the second of two official implementing

organizations to conduct its conservation activities in the new Campo-Ma'an and Mbam and Djerem national parks. In addition, ceremonieswere held this quarter to celebrate the formal beginning of theIndigenous Peoples Program.

The Management Board of the Foundation has chosen the WorldWildlife Fund - Cameroon (WWF) as the official ImplementingOrganization for FEDEC's activities in the new Campo Ma’an NationalPark. WWF's work plan proposal includes initiatives to:

• Improve the capacity of the Cameroonian government to manage thenew park. In particular, anti-poaching measures to be implementedwill include establishing guard surveillance posts and more thandoubling the current number of game guards.

• Reduce motives for poaching by establishing an ecotourism industryand other socioeconomic developments in the immediate vicinity ofthe park.

• Develop partnerships between stakeholders with often competinginterests, ranging from loggers to villagers.

• Provide environmental education to these stakeholders.

• Conduct ecological research and monitoring programs.

Section

14T

Campo Ma’anNational Park

Environmental Foundation

62

Ceremonies were held this quarter at a Bagyeli/Bakola settlement nearLolodorf to commemorate the formal beginning of the Indigenous PeoplesProgram. The president of FEDEC, Dr. Paulette Bisseck (right), joins the areaSub-Prefect in turning over health supplies that have been donated by theFoundation to the clinic in Nkouambpoer 1 village. FEDEC is also currentlysponsoring a program to provide Bagyeli/Bakola individuals with Nationalidentification cards. That same day the Ministry of Public Health was alsoproviding vaccinations against diseases particularly common among theBagyeli/Bakola, including tuberculosis, smallpox, polio, and tetanus.

IndigenousPeoples Program

63

Transition to Oil ProductionPhase

he complex effort of managing the transition from the constructionphase to the operations phase is well underway, preparing the

Project for the first oil production milestone in 2003.

• Engineers have developed detailed startup plans for the crude oilpipeline. The startup of the pipeline requires the coordination ofnumerous steps, much more complicated than just throwing aswitch and turning on the pumps. The first crude oil that will beproduced will take approximately two months to journey fromKomé, Chad, through the 1,070 kilometer long pipeline, to the coastof Cameroon where it will be loaded onto tankers and delivered toworld markets.

• Hiring and staff selection for the operations phase organizationcontinues.

- Many of the managers for the Project's operations phaseorganization have been selected and are on the job, assistingwith the transition planning effort. Several of theseindividuals have been chosen from the staff that haveparticipated in the construction phase of the Project.

- A number of Chadians and Cameroonians have already beenhired and trained for technical and engineering positions.Another 22 Chadians were sent letters this quarter, offeringthem employment with the Project as technicians.

- Thirteen previously hired Chadian technicians havecompleted their formal technical training in Canada and arenow being assigned to jobs in the U.S. to gain on the jobexperience.

• Planners are compiling detailed manuals for every facet of theoperations phase work - all the information needed to operate the oil

Section

15T

Transition to Production

64

wells, the Central Treatment Facility, the pump stations, the pipelinecontrol room, the pipeline, the Floating Storage and Offloadingvessel, and other Project facilities and management systems.


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