Overview

Although the full hydrocarbon potential of the landlocked West African country of Chad has still to be fully assessed, discoveries during the 1990s show the existence of viable oil reserves. The Komé, Miandoum, Bolobo and Sédigi oil fields could produce an estimated 150,000 barrels per day. However whether they are ever developed depends entirely on whether the crude pipeline from Chad to the coast of Cameroon is ever developed. There is the potential for a viable upstream oil industry.

The downstream oil industry is dependent on the importation of refined petroleum products from neighbouring Nigeria and Cameroon. Oil-derived products supply the majority of the country’s commercial energy needs. The Sedigi project, if it goes ahead however, could supply all Chad’s petroleum requirements

The industry is regulated by the Ministry of Mines, Energy and Oil (Ministère des Mines, de l’Energie et du Pétrole) (MMEP).

Upstream

Chad has proven recoverable oil reserves estimated at approximately one billion barrels and has the potential to be a significant energy producer with a viable upstream industry.

Oil exploration began in the 1970’s and several early discoveries were made in both the Lake Chad Basin and the Doba Basin in southern Chad by a consortium comprising Chevron, Conoco, ExxonMobil and Shell.

Exploration and development activities were suspended due to the outbreak of civil war in 1979. After Conoco withdrew from Chad in 1981, Exxon took over operations and discovered the Bolobo field in 1989. Chevron sold its stake to Elf Aquitaine in 1993.

Since November 1996, however, there have been renewed efforts to implement projects to develop and transport crude from the oilfields in Chad. The Chad to Cameroon Pipeline which is anticipated to cost in the region of US$ 3.5 billion is a project designed to produce from the oilfields in the Doba Basin and transport the crude by pipeline through Cameroon to Kribe offshore terminal.

Another project plans to make Chad self sufficient with respect to oil products by building a small refinery in N’Djamena to process the product from the Sedigi oilfield in the Lake Chad Basin.

In addition to the planned exploitation of these fields exploration activities have continued. In 1999, three companies, US-based Trinity Gas and Carlton Energy, and Nigerian Oriental Energy Resources signed an exploration agreement with the Chad government for Block H. Block H is 430,000 square kilometres and the group plans to spend $59 million on exploration.

Downstream

Despite having proven oil reserves, Chad has no facilities for the production or refining of its own oil and is therefore totally dependent on fuel imports mainly from neighbouring Nigeria and Cameroon.

Oil-derived products supply the majority of the country’s commercial energy needs. Current estimates of consumption of petroleum products include the quantity of products that are smuggled from Nigeria where the prices are lower. Oil consumption in 1998, is estimated at 1,200 bpd.

Refinery production problems in Nigeria and Cameroon caused fuel shortages and the prices to rise in Chad.

If undertaken, the Sedigi project, under which a small refinery would be built in the capital N’Djamena, would be able to supply nearly all Chad’s petroleum requirements and thus reduce its reliance on imports form Nigeria and Cameroon.

Distribution and marketing of fuels and lubricants products is carried out by local private Chadian companies as well as Shell (25%), Mobil (20%) and TotalFinaElf (20%).

Legislation

A revision of the oil production laws in Chad is based on production sharing and guarantees the recovery of exploration costs on commercially viable discoveries for investors.