Chad seeks Indian investment in petroleum

By Devirupa Mitra, IANS

New Delhi : Indian investment in petroleum in the tiny West African nation of Chad would be a win-win situation for both countries, says that country’s petroleum minister. Chad is expected to offer 20 new petroleum blocks by end 2007 or early 2008.


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“I want to invite Indian companies to come and discuss possibilities for collaboration, which will be a win-win proposition for both sides,” Petroleum Minister Emmanuel Nadingar told IANS.

Nadingar is in New Delhi to attend the India-Africa Hydrocarbon Conference, jointly organised by United Nations Conference on Trade and Development (Unctad)), India’s ministry of petroleum and natural gas and Federation of Indian Chambers of Commerce and Industry (Ficci).

The French-speaking country has not yet seen any Indian investment in the oil and gas sector, which the minister hopes to rectify on his current visit.

He cited “Indian expertise in crude refining” as an area of possible cooperation, as well as development of manpower for the fast-growing hydrocarbon industry.

The national oil company, Societe des Hyrocarbures du Tchad, is currently negotiating with China National Petroleum Corp to build a mini-refinery, as it is totally dependent on import of refined petroleum products from Nigeria and Cameroon.

Chad is presently riding high on growth since large reserves of oil were found in the country in the 1970s. The country currently has seven oil fields, with the Doba field being the largest. Its total production in 2006 was 156,000 barrels a day.

Although oil reserves were detected in the seventies, Chad became an oil producer only four years ago, after construction of a 1,078 km underground pipeline to Cameroon to transport crude oil.

But in exchange for sponsoring the pipeline construction, Chad had to pass a petroleum revenue management law in 1999.

Touted by World Bank as a “model” law for equitable revenue distribution, it required 12.5 percent of direct revenues from oil production to go directly into a London bank’s escrow account, whose management was monitored by an independent body.

Another 72 percent was channelled to fund “priority sectors” like infrastructure and health, 10 percent for a “future generations” fund to finance a post-oil society and the rest shared with the local government from where the oil was extracted.

In many ways, landlocked Chad is a classic example of the spectacular growth of the African hydrocarbon industry, which has witnessed production increase of over 30 percent in the last decade.

In 2000, per capita income in the West African nation of Chad was just $175 (Rs.6,866). Today, thanks to petroleum riches, it has shot up nine times to $1,500 (Rs.58,856).

It can also be described as a laboratory experiment on the relatively modern stress on equitable distribution of revenue from petroleum – an issue that has plagued oil-rich but largely impoverished African nations.

Nadingar says that his people had benefited from the start of oil production in 2003.

“Yes, of course, the production of oil has made a difference to the people for the better,” he asserted.

“With rising global oil prices, Chad had been able to pay all external debt in three years. From then, the export of oil was able to benefit our people,” said Nadingar.

But in 2005, the Chad government, led by Idriss Deby Itno, decided to revise the law to allow more funds to be retained by the central government, following a financial crisis and a rebel uprising.

The World Bank responded by suspending all loans to Chad but finally reached an agreement in July 2006 to increase the revenue share supervised by the independent body but also allowed the government to include new areas for spending its share.

“There has been an improvement in the living conditions of the population. Also, employment has also gone up, with all sub-contractors having to employ local people,” said Nadingar.

A year after the revenue law was revised, the Chad oil minister indicated that he was happy with its implementation.

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