Oil gives Chad 40 percent GDP growth

22 December - The projected growth in real GDP in Chad this year is set at 39.5 percent. Chadian per capita income is even expected to double by 2005, as the full impact of oil exports is noted. But this will only be possible if the fragile social and ethnic peace can be maintained.

Chad's first petroleum exports only departed for the international market in October 2003, through the Chad-Cameroon pipeline that was completed three months before. In November 2003, the country received its first oil payment into an account at Citibank London.

2004 is therefore the first full calendar year of oil revenues for the government of Chad. According to an analysis published this week by the US government agency Energy Information Administration (EIA), oil exports from Chad have already started making an economic impact: "In 2003, Chad's GDP grew 9.7 percent, while 2004 growth is forecast at 39.5 percent," the EIA analysis says.

Looking forward, per capita income in Chad is expected to double by 2005. Estimates are based on the well-known projections of Chad's oil production and the detailed World Bank agreements with the N'djamena government on how these new funds are to be spent. Only dramatic changes in oil prices and potential new oil discoveries can alter these figures.

Chad has widely been expected to receive US$ 3.5 billion in revenues during the first ten years of exporting oil through the new Chad-Cameroon pipeline, increasing annual government revenues by more than 50 percent. "Recent increases in worldwide oil prices will likely increase Chadian revenues," the EIA report however notes.

The already good news to Chadian economy is made even better by the high possibility of new oil discoveries. The consortium of US and Malaysian oil companies now producing in Chad are concentrated in the Doba Basin's three oil fields - Bolobo, Komé and Miandoun - which are estimated to contain reserves of 900 million barrels. Here, close to the border of the Central African Republic, a total of 300 wells are pumping a maximum of 250,000 barrels of crude oil each day.

Oil has already been found at several other locations, where production soon could be starting. In May 2004, the consortium of foreign oil companies indicated promising developments in its pursuit of additional oil resources in the area. In June 2004, members of the Doba consortium were awarded four new exploration permits in the Chari, Doseo, and Salamat basins, north of Lake Chad, according to EIA.

Chad also contains oil reserves in the Sedigi field in the Lake Chad Basin. Development of the Sedigi field was planned in conjunction with proposals for a petroleum refinery and power plant in N'djamena - which was to reduce Chad's domestic petroleum costs - but has been delayed. "Concorp International, the firm in charge of its development, constructed a conduit from Sedigi to N'djamena of such poor quality that it is unable to transport oil," EIA reports.

Oil revenues are secured for decades to come. The World Bank financed Chad-Cameroon pipeline has an estimated lifetime of 25 to 30 years. By 2030, however, Chad should be in a socio-economic position to invest in the infrastructure needed to keep oil flowing into world markets. If funds are properly managed, that is.

To obtain World Bank guarantees for the pipeline making oil exports possible, Chad had to agree to a transparent oil sector and earmarking 80 percent of government's oil revenues to fight poverty. This includes improved infrastructure and funds allocated to health, education, rural development, the environment and other social services.

However, "concerns that revenue from oil exports will fund military expenditures rather than needed social programs continue to date," also notes the US government report. Chad has been politically unstable since its independence and corruption, army interventions, ethnic strife and civil war always poses a risk to the current good outlook for socio-economic development.

Chad only recently achieved relative peace as President Idriss Deby signed peace and reconciliation accords with several rebel groups. Nevertheless, the political climate remains unstable and heavy fighting continues in northern Chad. The conflict in Sudan's Darfur region threatens to spread over the Chadian border. Stability is also threatened by President Deby's bid for a third presidential term despite resistance from opposition parties.

By staff writer