Officials on Sunday has said the pipeline will develop West Africa as an alternative to oil from more traditional markets in the Middle East.
The 1075km pipeline begins in landlocked Chad to the Atlantic ports of Cameroon and represents the World Bank’s largest-ever investment in sub-Saharan Africa.
The first 950,000 barrels left the Cameroon port of Kribi for world markets, even though Presidents Paul Biya of Cameroon and Idriss Deby of Chad are not scheduled to officially inaugurate the pipeline until Friday.
The shipment comes almost two months after oil first trickled into the pipeline from Chad’s southern town of Doba.
ExxonMobile holds a 40% stake in the project, with Malaysia’s Petronas holding 35% and ChevronTexaco 25%.
“There is no doubt that over the next decade there will be growing production in West Africa”
Hopeful of lessening US dependence on Middle Eastern oil, the Bush administration has pushed development of West Africa’s oil since 1996.
The United States is by far the world’s leading consumer of oil, burning up about 19 million barrels daily.
But the massive US demand is set to be partially met by several other West African countries too — like Chad, Congo-Brazzaville, Equatorial Guinea and Sao Tome and Principe, all emerging as new and potentially strong oil producers.
West African oil production, currently at three and a half million barrels per day, could top six million barrels per day in the next decade, according to Michael Rodgers – senior director for PFC Energy in Washington.
“There is no doubt that over the next decade there will be growing production in West Africa,” Rodgers said. “Anytime you have more oil coming onto the market it has the net effect of helping to keep prices down.”
The region already supplies the United States with about one-fifth of its oil – roughly equal to Saudi Arabia’s share of the US market.
Pipeline project could be worth
The World Bank also supplied three percent of the financing for the Chad-Cameroon pipeline. It is part of a strategy to get developing countries to generate revenues from their own resources.
In a rare venture into oil pipeline financing, the Bank has set up an independent monitoring panel to oversee accounting – an unprecedented undertaking in a region known for corruption, plutocracy and environmental disasters.
Other financiers include the European Investment Bank, US Export-Import Bank, the French export credit agency COFACE and a group of private banks led by Dutch ABN-Amro and Credit Agricole Indosuez.
900 million barrels
Chad and Cameroon signed a treaty for the construction of the pipeline in 1996. Construction began in 2000.
The project included development of 300 wells in the Doba oilfield in southern Chad. The oilfields are estimated to hold reserves of more than 900 million barrels.
Project sponsors say that revenues could reach US$2 billion for Chad and US$500 million for Cameroon over the projected 25-year production period.
Despite World Bank monitoring, international environmental and human rights organisations have protested against the project, fearing environmental and social disaster and little lasting benefit to the countries’ peoples.
Chad’s leaders have pledged to invest the majority of expected oil revenues in programmes to lift the country out of poverty and to develop health, educational, and agricultural sectors.
International environmental organisations, notably in the United States and Germany, have called the project a danger to Cameroon’s rain forest and to Pygmies living there.