33_allchapters.pdf

Chad Export Project Project Update No. 33 Year End Report 2012

This report has been prepared by Esso Exploration and Production Chad Inc., in its capacity as Operator of the

Consortium and as Project Management Company on behalf of the Tchad Oil Transportation Company S.A. (TOTCO) and the Cameroon Oil Transportation Company S.A. (COTCO).

Preface

This Project Update, the thirty‐third such report for the Chad Export Project (also referred to as the Chad/Cameroon Development Project), covers the period from July through December 2012. The report reflects the activities of the project operating company and its prime contractors, with a particular focus on compliance with the Environmental Management Plan (EMP). Several entities share responsibility for implementing the project.

Oilfield development and production in Chad is conducted by Esso Exploration and Production Chad Inc. (EEPCI) on behalf of the Consortium (Esso, Petronas, Chevron).

Pipeline activities in Chad are conducted by the Tchad Oil Transportation Company S.A. (TOTCO).

Pipeline activities in Cameroon are conducted by the Cameroon Oil Transportation Company S.A. (COTCO).

During construction, EEPCI provided project management services to TOTCO and COTCO.

These reports are submitted through, and subject to verification by, the World Bank and Lender Group as a reporting requirement of the project’s partnership with the Bank and the two host countries.

This report also represents a commitment to transparency by Esso and its co‐venture partners. By publishing this information, the project wishes to make it possible for the World Bank and Lender Group, the citizens of the host countries, interested non‐governmental organizations (NGOs) and others to stay well informed about the project as it unfolds.

The reports are posted on the project’s website (www.essochad.com). A limited quantity of printed reports is also distributed to stakeholders in fulfillment of reporting requirements and to make information more readily available to the citizens of Chad and Cameroon, where very few people have access to the Internet. Reports are also available in French.

October 2000 has been designated as the official start date of the project for the purposes of data compilation. Currency conversions are based on the rate of exchange at the time of the expenditure and this edition utilizes exchange rates of FCFA to one U.S. dollar as follows:

1st Quarter, 2012 ‐ 499 FCFA

2nd Quarter, 2012 ‐ 507 FCFA

3rd Quarter, 2012 ‐ 510 FCFA

4th Quarter, 2012 ‐ 511 FCFA

Table of Contents

SNAPSHOT SUMMARY 7

PRODUCTION & CONSTRUCTION 11

REPORTABLE ENVIRONMENTAL MANAGEMENT PLAN SITUATIONS 17

EMP MONITORING & MANAGEMENT PROGRAM 21

SAFETY 31

CONSULTATION & COMMUNICATION 41

COMPENSATION 47

LAND USE IN THE OILFIELD DEVELOPMENT AREA 49

LOCAL EMPLOYMENT 59

LOCAL BUSINESS DEVELOPMENT 63

HEALTH 67

COMMUNITY INVESTMENT 71

HOST COUNTRY REVENUE 81

7

Snapshot Summary To date, the project has invested 1.9 trillion FCFA ($3.8 billion) in initiatives aimed at

maintaining production levels. The Consortium’s investment in additional production and water reinjection wells, coupled with other measures to support the daily rate of oil production, has enabled the project so far to deliver over 454 million barrels of oil to market in its first nine years of production.

o Spending on production support during 2012 totaled 300 billion FCFA ($590 million, including $385 million in capital investments and $205 million in day‐to‐day operations directly related to sustaining production).

o A major milestone was reached in 2012, with the project having produced, transported and delivered over 500 liftings of oil through its export system and Floating Storage and Offloading Vessel, without interruption.

2012 was a record year for Environmental Management Plan (EMP) compliance, with the project recording zero non‐compliance situations in the second half of 2012. The total number of non‐compliance situations for the year was four.

Highlights from 2012’s EMP Monitoring and Management Program include the continued implementation of a variety of monitoring programs as part of the project’s defense system to ensure the integrity of its infrastructure from Komé to Kribi.

o These programs include corrosion monitoring and control, groundwater monitoring and aerial patrols.

2012 also marked the successful conclusion of the project’s PhD scholarship program with the Cameroonian government.

A serious accident occurred in August resulting from a flash fire during well maintenance performed by a contractor. In addition to two fatalities, there was one critical injury and two first aid cases. The project has conducted an in‐depth investigation into the cause of the accident and has taken measures to help prevent similar accidents in the future.

As part of its standard practice, the project held hundreds of consultations in Chad and Cameroon in 2012 in communities near project areas. The sessions covered a wide range of topics, including outlining a new claims process in the Oil Field Development Area (OFDA), educating villagers about the hazards of setting brush fires along the pipeline in Cameroon and an AIDS education campaign along the pipeline in Chad.

1

Snapshot Summary

8

Compensation paid to individuals for land use by the project in the last four quarters totaled over 750 million FCFA (over $1.5 million) in cash and in‐kind payments.

o Almost 15.5 billion FCFA (over $30 million) in individual compensation for land use has been disbursed since the project began.

o An increase in compensation in Cameroon was recorded in the third quarter, due to tree cutting activities in Belabo.

In 2012, the project achieved its lowest land use footprint in years and reduced its backlog of land and compensation‐related grievances by 80%.These achievements were the result of significant revisions in the project’s land management plan and recent restructuring of the Environmental Management Plan Department.

At year end, over 6,300 Chadian and Cameroonian nationals were employed by EEPCI, COTCO, TOTCO and their contractors – representing almost 90% of the total project workforce. Almost 80% of those Chadians and Cameroonians working for the project are employed in semi‐skilled, skilled, supervisory or executive jobs.

In 2012, the project’s support of Chad and Cameroon’s economies through purchases of goods and services from local suppliers totaled 88 billion FCFA ($175 million). In addition, COTCO has begun construction on a temporary camp for workers who will modify two sections of the pipeline in support of the Lom Pangar Hydropower Project, a first step to increase Cameroon’s electric generation capacity five‐to‐ten‐fold over the next 20 years.

The project’s health‐related priorities in 2012 included both employee and community‐based initiatives. While villages along the pipeline route in Chad benefitted from an AIDS education campaign, the project also worked to empower women in the OFDA to teach their communities how to prevent and treat malaria. Meanwhile, the project’s Medicine and Occupational Health Department conducted diabetes and other screenings for staff, to help address emerging health issues.

A new building to provide emergency hospital services in Kribi, a program to install water wells in communities across Cameroon, and the launch of a second phase of a women’s empowerment initiative in the oil producing region were key highlights from the project’s community development investments in 2012.

The project has generated over $10 billion in revenues for Chad since oil began to flow in 2003, much of which the country continues to invest in Chad’s economic, social and cultural development sectors. 2012 marked another milestone for Chad’s petroleum industry as the country completed its first‐ever direct sales of crude on the international market through a royalty‐in‐kind arrangement with the project.

Chad/Cameroon Development Project Project Overview

Oil Field Development Area(Includes Pump Station #1)

Maintenance Area #3

Maintenance Area #2

Maintenance Area #1

Export Pipelin

e

MOUNDOU

MOUNDOULI

DOBA

MIANDOUM

Donia

Komé

Bébédjia

Baikoro

Boro

Miladi

Béro

Béti

Mbikou Miandoum

Nankessé

BADILA

Béladjia

Boye Bessao

BOLOBO

NgaraNYA

Overview of the Oilfield Area

Chad/Cameroon Development Project

MAIKERI

KOME

TIMBRE

11

Production & Construction Spending on production support during 2012 totaled 300 billion FCFA ($590 million, including $385 million in capital investments and $205 million in day‐to‐day operations directly related to sustaining production). To date, the project has invested 1.9 trillion FCFA ($3.8 billion) in initiatives aimed at maintaining production levels. The Consortium’s investment in additional production and water reinjection wells, coupled with other measures to support the daily rate of oil production, has enabled the project so far to deliver over 454 million barrels of oil to market in its first nine years of production.

In addition to drilling new oil wells, the production support investments in the project’s Doba Basin oilfields included a high pressure water injection program and hundreds of well stimulation procedures. As a result − even as the project’s oldest oil wells mature and their output declines − the 2012 daily produc on rate was 101,400 barrels per day, a level roughly 12% below the average level for 2011.

The project reached a major milestone in 2012, having produced, transported and delivered over 500 liftings of oil (454 million barrels) through its export system and Floating Storage and Offloading Vessel, without interruption. New Chinese and Canadian producers of Chadian oil are expected to begin shipping additional crude through the project’s export system as early as 2013.

2

Production & Construction

12

GAS DEBOTTLENECKING: A MAJOR INVESTMENT TO ENSURE LONG‐TERM PRODUCTION

Dozens of kilometers of pipes are being installed as part of a $100 million initiative to ensure a sufficient supply of gas is available to meet long‐term production needs. This multi‐phase effort called “gas debottlenecking” is the project’s latest investment to extend production of Chad’s crude for years to come. While all oil wells produce varying amounts of natural gas, the project has several wells that produce the majority of the gas needed to run a power plant that generates 100+ megawatts of power to pump the project’s 666 producing wells and export Chad’s crude. However, as the wells mature, their pressure naturally decreases, and it becomes more difficult to extract the gas and transport it from the well to power plant.

Above, workers install new equipment as part of a temporary gas debottlenecking solution which is expected to come on line during the first quarter of 2013. A longer term solution requires installing a separate parallel pipeline to transport the gas to the power plant and is expected to be completed during the second half of 2014. Additionally, the project is working on a permanent solution to natural reductions in gas production. Referred to as the “crude firing project,” it involves adapting the power plant’s turbines to run on crude oil, and will be phased in gradually to offset the reduction in available gas.

“These investments are necessary to maximize our production and profitability for the project and for Chad. We are making this

long‐term investment because we are confident that there is much crude left to be extracted from the Doba fields.”

‐ Gerard Nadjiadjim, Project Engineer


13

MAXIMIZING PRODUCTION WITH RELIABLE PUMPS

Keeping Chad’s oil flowing requires reliable pumps that deliver crude from deep in the well to the surface. The project’s pump reliability continued to improve in 2012, surpassing its record performance in 2011, for which the project’s well work team won a global award from the ExxonMobil Production Company.

Several factors contribute to the project’s strong record of reliability. First, the well surveillance team monitors in real time pump parameters such as pressure, temperature, voltage speed and power. Early detection of problems along with daily team discussions ensures the maintenance team is always ready to make any necessary adjustments. Finally, rigorous analysis is performed on every failed pump by a team based in Chad and Houston. Results of this analysis contribute to mitigation steps that protect other pumps. These studies have also resulted in design changes by the pump manufacturer.

Above, a pump lies dismantled, awaiting examination and analysis by the investigation team. The reliability of both types of pumps primarily used to extract Doba crude has been steadily increasing since 2006.

“Surveillance of the wells is important to keeping our pumps running smoothly. And this is important because when a pump is running, it is producing. When the pumps stop, it costs the project and Chad money. Teamwork is critical, with subsurface engineers, surveillance engineers and field operators all working together to gather and interpret data and keep the pumps running smoothly.”

‐ Pebah Sodibe, Artificial Lift Engineer


14

RESULTS FROM PRODUCTION SUPPORT INVESTMENTS

At year end 2012, project production support investments were contributing about 77,300 barrels per day to the project’s crude oil output. Without the Consortium’s investments, production would have fallen to about 24,100 barrels per day – just under one‐fourth of the current yield of 101,400 barrels per day – due to the natural decline in base production, which is occurring faster than initially assumed.

PRODUCTION STATISTICS FOR LAST FOUR QUARTERS

Net Volume of Shipments from Marine Terminal

Q1 2012 Q2 2012 Q3 2012 Q42012

Last 12 Months

Project to Date

Millions of Barrels

9.5 9.5 9.3 8.6 36.9 454

Export Tanker Shipments 10 10 10 9 39 501

101,400 barrels/day(2012 Average)

76% ofTo

tal Productio

n77,300 barre

ls/day

Thousand Barrels Per Day (kbd)

Water Injection

Well Stimulations

Additional Oil Wells

Declining Output from Original Wells


15

PRODUCTION INVESTMENT PROGRESS

The project’s total amount of recoverable oil (sometimes called proved oil reserves) remains approximately 900 million barrels, but the rate of extracting the oil from each well has been lower than originally expected due to the challenges created by the loose sand and fragmented nature of the oil bearing formations found in the Doba Basin, and consequently additional wells have been required.

The project added 56 new oil wells in the last 12 months, with 25 wells added in the last two quarters of 2012. A total of 666 production wells were on line at year end 2012. Additional wells help the project overcome the low mobility of the Doba Basin oil. Low mobility limits the effective draining radius of each well, requiring that wells be positioned closer together for optimum extraction.

The high pressure water injection program continues and a total of 61 water injection wells were on line at year end to support the program. Water makes up about 90% of the fluid extracted from project oil wells and is reinjected deep underground back into the field to maintain pressure and support continued production. The high pressure water injection program addresses the drop in pressure that has taken place in the Doba Basin oilfields as oil was extracted. Pressure must be maintained in order to sustain production levels.

The Doba Basin oil resides in unconsolidated sands, producing fine particles that migrate to the wells and clog the producing zones. Techniques to counter this problem include well stimulations to backwash the pores in the oil bearing formation in addition to upgrades and repairs of subsurface machinery. The project’s well work team conducted 850 renovation and enhancement procedures on oil wells in the last twelve months, 290 of them in the second half of 2012.

17

Reportable Environmental Management Plan Situations 2012 was a record year for Environmental Management Plan (EMP) compliance, with the project recording zero non‐compliance situations in the second half of 2012. The EMP sets out the criteria for identifying non‐compliance situations. The total number of non‐compliance situations for the year was four. Three were identified at Level I, an early warning indicator intended to detect issues before they represent any lasting impact to a sensitive resource.

One Level II non‐compliance situation occurred in the first half of 2012, when a contractor responsible for right of way maintenance (Bantou) repeatedly failed to pay its workers in a timely manner. The case was resolved in June after all outstanding payments were made. Information about the criteria for classifying non‐compliance situations is available at the end of this section.

Compliance Performance Index

Monthly Average Non‐Compliance

Situations

3

Reportable Environmental Management Plan Situations

18

Q3 AND Q4 REPORTABLE SITUATIONS

Total Reportable Situations by Country

Q3 2012 Q4 2012

Level I Level II Level III Total Level I Level II Level III Total

Chad 0 0 0 0 0 0 0 0

Cameroon 0 0 0 0 0 0 0 0

Total 0 0 0 0 0 0 0 0

2012 REPORTABLE SITUATIONS SUMMARY

2012 Reportable Situations by Country Level I Level II Level III Total Reportable Non‐

Compliance Situations Total Reportable

Spills

Chad 0 0 0 0 0

Cameroon 3 1 0 4 0

Total 3 1 0 4 0

2012 Non‐Compliance by Company

Level I Level II Level III Total

COTCO 2 0 0 2

BANTOU 1 1 0 2

2012 Non‐Compliance Situations by Category

Level I Level II Level III Total

Air Quality Monitoring 1 0 0 1

Socioeconomic 1 1 0 2

Aerial Surveillance 1 0 0 1

Total 3 1 0 4

Reportable Environmental Management Plan Situations

19

CONTEXT: EMP REPORTING

The project’s EMP includes reporting standards for non‐compliance situations and for spills. The standards provide methodical and consistent mechanisms for measuring performance on environmental protection and spill prevention.

Non‐Compliance Situations

The project’s three‐level ranking system for EMP non‐compliance situations was designed to provide an early warning mechanism to detect issues and help correct non‐compliant behaviors and practices well before they became serious enough to cause damage.

This pyramid illustrates the project’s early warning system approach for identifying and managing EMP non‐compliance situations. The first two levels serve to alert the project to potential environmental impacts. Only the top level, Level III, indicates actual serious environmental impact to a defined sensitive resource.

Spills

The EMP requires the reporting of all spills equal to or greater than one barrel of oil, 10 barrels of produced water or 100 kilograms of a chemical.

Could give rise to a serious impact to an identified sensitive resource

Level IIExpeditious Action Required

No significant impact to an identified sensitive resource, but not consistent with the EMP

Level IEarly Warning

Level IIISerious

Impact to an identified

sensitive resource

21

EMP Monitoring & Management Program Highlights from 2012’s EMP Monitoring and Management Program include the continued implementation of a variety of monitoring programs as part of the project’s defense system to ensure the integrity of its infrastructure from Komé to Kribi. These programs include corrosion monitoring and control, groundwater monitoring and aerial patrols.

2012 also marked the successful conclusion of the project’s PhD scholarship program with the Cameroonian government.

CORROSION CONTROL: PROTECTING UNDERGROUND INFRASTRUCTURE

Similar to a giant network of low‐voltage underground lightning rods, the project’s cathodic protection system defends thousands of kilometers of project pipelines from corrosion, a naturally‐occurring phenomenon when metals are placed in the ground. The system acts as an additional layer of protection for the high‐strength carbon steel piping which is already coated with layers of anti‐corrosion protective materials.

The cathodic protection system uses equipment that directs small electrical currents through pieces of metal which have been strategically placed under the ground near pipelines, protecting them for up to several kilometers. Project specialists regularly monitor the various cathodic protection system components (left), which can detect even slight changes in ground chemistry that might indicate a potential concern.

4

EMP Monitoring & Management Program

22

GROUND ENTRY MONITORING: REGULAR VISUAL INSPECTIONS TO KEEP THE PIPELINE SAFE

In addition to monitoring the cathodic protection system, which operates around the clock, regular inspections are conducted at all locations where project pipelines enter or exit the ground. These areas are particularly important to monitor because they can be impacted by human activity, sharp stones, rainfall or differences in the density of surrounding soils – all of which can affect the integrity of the pipeline. To inspect the air/soil interface, the monitor digs a trench to ensure the pipe’s factory‐installed anti‐corrosion coatings remain intact above and below ground.

“Cathodic protection is a very important backup to the primary lines of defense – the quality of the pipe material and its protective coatings. This job is challenging, but rewarding, as the company relies on us to ensure the pipeline remains safeguarded from any corrosion‐related issues.” ‐ Maouale Mbainaiwala, Corrosion Technician


23

AERIAL PATROLS: A LOW ALTITUDE APPROACH TO MAINTAINING PIPELINE INTEGRITY

EMP monitors conduct low altitude airborne inspections of the entire length of the pipeline in Chad and Cameroon to detect any potential issues with the right of way. Erosion, exposed pipeline, leakage, unauthorized activities and encroachment can often be easily spotted from the air. Monthly foot patrols are conducted to supplement the aerial surveys and to further investigate potential problems identified during the flights.

The patrol team usually includes three people: a spotter who conducts a visual scan of the pipeline right of way (ROW), calling out potential issues; a colleague who tracks the GPS coordinates when an issue is spotted; and a third person to record the data that will be compiled after the flight. A representative from the Cameroonian government’s Pipeline Steering Committee (CPSP) participates in the patrol to observe the right of way and verify that the work is being conducted properly.


24

GROUNDWATER TESTING: NO PROJECT‐RELATED IMPACTS

Special monitoring wells near the project’s infrastructure help ensure that groundwater in the Oilfield Development Area (OFDA) is not affected by project activities. The monitoring wells, often a second, third or even fourth line of defense against contamination from project facilities, have never detected contamination since crude production began in 2003.

The wells, which are placed between project infrastructure and nearby villages, have always been tested on a monthly basis. However, because of the project’s perfect record, the EMP department’s groundwater monitoring team will begin testing non‐critical wells on a quarterly basis in 2013. Critical wells, such as those near the waste management area, injection wells and fuel station, will continue to be tested on a monthly basis.

The groundwater monitoring team purges wells at least three times before samples are taken (left), ensuring that fresh groundwater is sampled. The team checks for any abnormal levels of chemical characteristics such as acidity, hydrocarbon and chlorine content. In the event of any unusual results, a rapid‐response investigation and remediation strategy would be

triggered.

“The main reason we do this monitoring is to protect the local communities by making sure the project doesn’t negatively impact the groundwater. Among other things, this regular monitoring ensures that if there is any issue, we can promptly conduct an investigation, and the data we record allows us to quickly design and implement any necessary remediation. We are ready to go immediately, but since the project started ten years ago, we’ve never had to be called into (mitigation) action.” ‐ Abdelrazik Moustapha, Groundwater Monitoring Lead


25

PROJECT STRENGTHENS EMP TEAM TO MANAGE RIGHT OF WAY INTERACTIONS

To reinforce the team that manages the increasing number of interactions between the pipeline right of way (ROW) and new infrastructure across Cameroon, pipeline operator, COTCO, has hired and trained a full‐time EMP ROW Monitor. The monitor’s responsibilities include tracking the number, type, and location of all interactions. The monitor also advises third party developers on technical specifications and works with the Cameroonian government’s Pipeline Steering and Monitoring Committee (CPSP) to ensure developer compliance with pipeline integrity policies.

An example of new infrastructure includes the new four‐lane highway that will soon intersect the pipeline and connect Yaoundé with Douala to help facilitate trade and travel in Cameroon. Because this 200‐kilometer highway will require cutting, digging and moving heavy equipment in close proximity to the pipeline, COTCO and the construction company are collaborating to ensure the pipeline remains secure. As it does with other third party developments that interact with the pipeline, COTCO has hired a spotter to note any potential issues that arise during construction.

“The contractor who is building this highway is as concerned as we are about ensuring the integrity of the pipeline. So they have asked us to help them physically verify its depth and location. This is a good thing, because it shows they have the right attitude about interactions with different types of infrastructure.” ‐ Fulbert Ngatchi, EMP ROW Monitor (in blue)

“Only when we have verified the pipeline’s depth and location will we proceed with devising solutions to build this road safely. We are working together to manage any issues that come up while trying to prepare for our groundbreaking ceremony with President Biya.” ‐ Niu Ming Shan, Project Manager, China First Highway Engineering Co. (in pink)

“I am with the construction company every day. I observe their activities and they proactively tell me what they are doing, even

asking for my advice when it comes to possible pipeline interactions. They are aware of the regulations and respectful of them.”

‐ Enouga Onguene Gregoire, ROW Spotter


26

LOM PANGAR MODIFICATION: NEW OPPORTUNITIES FOR ARCHEOLOGICAL DISCOVERY

Deep in Cameroon’s Deng Deng forest, an archeology team is conducting research at a temporary camp site. Over the next two years, the site will serve as a base for more than 200 workers who will modify two 13 kilometer sections of the project’s oil pipeline to accommodate one of Cameroon’s largest infrastructure projects to date: the Lom Pangar Hydropower Project. During a project‐funded survey of the access road and camp in 2012, the team identified multiple sites of archeological significance.

A number of artifacts uncovered during the survey, including the byproducts of ancient iron smelting furnaces and fragments of pottery, will be used to help scientists reconstruct a picture of human activity and the environment in the area several millennia ago. For example, knowing where furnaces were located will help the archeologists understand the social structures and practices of ancient peoples in the area, and analyzing burnt wood fragments from the furnaces can suggest what the topography was like. Data from the sites can also be aggregated to help answer the question of whether the iron may have originated in Europe or Africa. For more on the project’s support of the Lom Pangar Hydropower Project, please see the section on Local Business Development.

Archeologists working with the project uncover ancient pieces of iron ‐ a byproduct of centuries‐old smelting practices ‐ at the 475th site of archeological significance in Cameroon discovered since construction of the pipeline. At each one of these sites, a strict process of mapping, documentation, verification and analysis is followed by the archeology team and COTCO to ensure integrity.

“If the pipeline had never been constructed here, it would have easily taken us over 100 years to find the quantity of artifacts that we have. This is because in Africa, many governments do not have sufficient resources to fund research, so archeologists like us must wait until a huge opportunity like this comes to learn about our history.” – Olivier Nkonkonda, Archeologist (left)


27

REMAINING COTCO PHD SCHOLARSHIP RECIPIENT COMPLETES STUDIES

Six years ago, Akama Pierre responded to a call for applications from Cameroon’s Ministry of Culture to pursue PhD studies in archaeology. For Pierre, this was a major step toward pursuing his childhood dream of studying great civilizations.

Currently a lecturer at the University of Yaoundé, Akama successfully completed his PhD thesis at the University of Brussels last year. He is the third Cameroonian archeological student to receive the degree thanks to a scholarship from COTCO. The scholarship program was part of an agreement between Cameroon’s Pipeline Steering Committee and the project’s pipeline operator in Cameroon, COTCO. Below, Akama (center) celebrates a successful thesis defense with his university professors, representatives from CPSP and COTCO.

“This PhD program has changed my life, even beyond the financial support. It allowed me to travel outside Cameroon and write my thesis at a great European university. It also has helped me discover Cameroon’s cultural and ecological diversity from the forest to savanna. I’ve always known since I was a child that I wanted to study archeology and paleontology, because I believe that knowing our past allows us to understand our present and plan a better future. I have to thank COTCO, CPSP, my professors and members of my thesis committee for all of their support.” – Dr. Akama Pierre, Lecturer, University of Yaoundé I, Division of Science, École Normale Supérieure


28

STACK EMISSION TESTING: FREQUENT MONITORING HELPS ENSURE EMISSIONS COMPLIANCE

Results from emissions tests conducted by independent experts in November showed that all three incinerators at the Komé Waste Management Facility are meeting World Bank established standards. Testing emissions from the incinerators’ exhaust stacks is conducted every three years under normal circumstances. If, as was the case in 2011, a test result shows non‐compliance, testing is conducted every year until compliance is achieved.

“With our hazardous waste incinerator (pictured above), we use the burner to burn the waste as efficiently as possible and a scrubber to clean the exhaust to internationally recognized standards. With the burner and the scrubber operating consistently, we expect that our environmental performance will be even better than previously. It’s important to have all of our incinerators working properly, because we need to do our best to protect the environment for the surrounding communities.” ‐ Sam Dadoumnadji, Komé Waste Management Facility Coordinator


29

WASTE MANAGEMENT STATISTICS

The project utilizes a range of techniques for disposal of non‐hazardous waste, as described in the EMP (e.g., incineration, landfill, recycling and third party contractors) and shown in the following table.

Non‐Hazardous Waste Management (Tonnes)

Q1 2012 Q2 2012 Q3 2012 Q4 2012

12 Month Total

Domestic Garbage Incinerated On Site 349 754 558 510 2171

Innocuous Solid Waste Buried (landfill) 605 56 151 123 935

Recycled to Local Communities 441 293 387 428 1549

Sent to Approved Third Party Facilities for Re‐Use, Recycling or Disposal

488 156 243 1119 2005

Total 1,883 1,259 1,339 2179 6660

At year end 2012, the project had 1107 tonnes of oily contaminated soil (hazardous waste) in its hazardous waste facility. The project is working with BOCOM, a waste management company, to ensure appropriate processing and disposal of this waste inventory.

31

Safety Tragically, a serious accident occurred in August resulting from a flash fire during well maintenance performed by a contractor. In addition to two fatalities, there was one critical injury and two first aid cases. The project conducted an in‐depth investigation into the cause of the accident and has taken measures to help prevent similar accidents in the future. Reports on these prevention measures and other details of this accident are provided later in this section.

The Chad/Cameroon Development Project follows United States Occupational Safety and Health Administration (OSHA) guidelines for recording accidents and injuries, even though the project’s activities take place outside the United States. The OSHA guidelines provide the project with a comprehensive, consistent, internationally recognized standard by which the project’s safety performance can be evaluated.

In addition to the incident described above, another accident occurred on project grounds in the third quarter of 2012, when a teenage boy accidentally drowned in rain water which had gathered in a reserve pit at an unused well pad. Even though this incident was not reportable under OSHA guidelines, the project conducted a full investigation and a number of preventive measures have been implemented.

Recordable Incident Rate

The Recordable Incident Rate, key industry indicator, measures overall safety performance by capturing even minor injury accidents. For years, the project’s Recordable Incident Rate has been well below the average rate of the U. S. petroleum industry as a whole, recording a rate of less than half of the benchmark in 2012. The rate measures recordable incidents per 200,000 working hours. The industry benchmark for the U.S. petroleum industry is derived from reports to the American Petroleum Institute by participating companies.

5To

tal R

ecordab

le In

cidents per

200,000 W

ork Hours

Safety

32

TEACHING MOTORCYCLE RIDERS IN THE OFDA TO DRIVE SAFELY

While motorcycle taxis play an important transportation role in Chad and Cameroon, many operators drive without licenses, proper protective clothing or sufficient instruction on how to safely operate their vehicles. As a result, the drivers and their passengers are some of the most vulnerable on the roads.

A tragic example of this occurred in August 2012, when a motorcycle taxi collided with an oncoming project vehicle, claiming the lives of the motorcyclist and his passenger. Although the project driver was found not to be at fault, the project initiated a campaign to teach motorcycle safety in a number of Oilfield Development Area (OFDA) communities.

Instructional sessions conducted by a team from the EMP, Safety Health and Environment (SHE) and Security departments, were held in Komé, Bébédjía, Miandoum and Doba. The workshops focused on teaching motorcyclists the rules of the road, passenger safety and cargo handling, the dangers of speeding and practicing defensive driving tactics. Participants were given reflective safety jackets for increased visibility. The project plans to conduct follow‐up sessions each quarter throughout 2013 to help prevent similar tragedies in the future.

Safety

33

“In Miandoum, we have created an association to help ensure that anyone providing transportation services for a fee will do so safely. If you want to be part of our association, you must know how to ride professionally. We are very concerned about speeding, drunken driving, and ensuring that engines are in good repair. Our members received a lot of information from the project’s training sessions, and we would love it if the project can continue to provide these types of sessions periodically.” ‐ Florent Neurdingam, President of the Miandoum Motorcyclists’ Association

“It’s important to remember that roads do not kill people, but people kill people on the roads when they are not sufficiently trained. I have observed the motorcyclists’ behavior before and after the training, and there is a difference. Our motorcycle taxis now carry more manageable loads and many are now driving more slowly, especially through the villages. Since the sessions in October, there have been no recordable accidents in our area.” ‐ Djerada Nama, Sous‐prefect, Miandoum Canton (above)

Safety

34

DOUALA SAFETY COMMITTEE: TAKING WORKPLACE SAFETY TO THE HOME

In an effort to expand its “Take Workplace Safety to the Home” initiative, COTCO’s Douala Safety Committee recently identified and collaborated with the Ecole Publique Cite des Enseignants, a high‐needs primary school in Douala, to teach safety principles to the students. The team, which normally works with COTCO’s staff, contractors and neighbors to improve awareness of safety practices, engaged school leadership and created a safety curriculum for the children.

“I was very happy to learn some things like to walk on the sidewalk not the road, don’t listen to music while walking, cross the road using the painted area and when the light for cars is red. I see many people doing the wrong thing, but I will do the right thing, because I want to grow up to be a father and a footballer.” ‐ Ngalla Steba Roy Martin, Student, 7 years old (above)

“My group did a sketch on food safety and cholera. We explained what cholera is and how to prevent it. It was fun and I think everyone learned from it – I am happy because I was helping keep my friends safe.” ‐ Keti Binam Sorelle Grâce, Student, Age 8 (left)

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The team also produced a safety‐related sketch/play‐acting competition for the children to present what they had learned about food, road and home safety to their classmates. The presentations were evaluated by a panel of judges and winners received stepladders, rechargeable flashlights, safety DVDs and safety booklets. In addition, the school’s 850 students also received exercise books and pencil cases filled with supplies. Teachers received T‐shirts, and safety‐related DVDs and booklets.

“This experience was very enriching for our group. The kids were really excited and committed and made some great presentations. Based on our success, our General Manager recommended that we continue our work in this area so we are planning to bring this to other schools. For me, this committee allows us to share our valuable safety knowledge and mentality that so many people in Cameroon don’t otherwise have the opportunity to learn.” ‐ Sidonie Andele, Douala Safety Committee member, COTCO

“I’ve been working as a principal for 10 years, and I’ve never heard of anything like this in Cameroon. For a company to take the time to visit a school like this is unheard of ‐ we were on the national TV and in the newspapers, and now everybody knows our school. Now, other school principals have come to us to find out what our secret is ‐ they want to know how they can get something similar for their school as well.” ‐ Madame Basseka Noël Jeanette, Headmistress, Ecole Publique Cite des Enseignants

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SAFETY STATISTICS

On‐the‐Job Injuries (OSHA Reportables)1

Q1 2012 Q2 2012 Q3 2012 Q4 2012

12 Month Total

Project to date

Fatalities 0 0 1 1 2 6

Lost Time 0 0 3 0 3 31

Restricted Work 1 1 1 0 3 146

Medical Treatment 1 3 2 2 8 316

First Aid Cases 9 7 16 4 36 2,893

Worker Hours (thousands) 3,735 3,862 3,745 3,800 15,142 291,045

Trend Analysis

Recordable Incident Rate 0.11 .22 .32 .11 0.18 0.34

Lost Time Incident Rate 0.00 0.00 .16 0.00 0.08 0.04 1. Safety statistics include EEPCI, TOTCO, COTCO, other affiliates working for the project and their respective contractors. They include

incident involving a location, property or activities owned, controlled or supervised by those entities.

2. Average TRIR& LTIR for last 12‐months and project to date.

Traffic Safety Tally

Q1 2012 Q2 2012 Q3 2012 Q4 2012

12 Month Total

Project to date

Traffic Accidents1

2 4 4 2 12 942

1. Includes all project vehicle traffic incidents, including those not recordable under OSHA guidelines. The total includes minor and major vehicle damage accidents plus injury accidents, including non‐recordables.

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PROJECT RECORDABLE FATALITY

Two Chadians working for a project contractor died as a result of an accident on 5 August, 2012. The incident occurred when gas accumulated in an open‐top tank and ignited during maintenance of a well. The resulting explosion injured five workers, two of whom subsequently passed away from their injuries. The project’s investigation team conducted a comprehensive review of the incident and subsequently determined that a truck adjacent to the tank provided the ignition source. As with all serious accidents, the team analyzed all the facts of the accident so lessons could be learned to prevent similar occurrences in the future.

Actions Taken

The investigation found that the contractor had deviated from approved safety procedures, including failure to use project‐approved equipment, supervisor fatigue and inadequate job safety briefings and preparation. The following are among the actions taken in response to these findings:

The contractor held group sessions with all of its workers to reinforce safety expectations, including improved hazard recognition, compliance with accepted practices and participation in daily pre‐job safety briefings

The contractor increased the level of supervision on job sites

The project engaged an external consultant to assess whether the incident revealed any broader safety culture issues

Project and contractor experts conducted a peer review after three months to assure that the strengthened safety procedures were being maintained

The project has established an ongoing engagement and follow‐up program with the contractor’s senior management to reinforce the project’s commitment to safety

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CONTEXT: WORKPLACE RISK MANAGEMENT AND ACCIDENT PREVENTION

Safety experts universally agree that the best “response” to an accident is to act in advance to prevent the accident from happening in the first place. That philosophy is the cornerstone of the project’s safety program. The project strongly reinforces the concept of “Nobody Gets Hurt,” and that we are all Risk Managers. The expectation is centered around all workers actively identifying hazards and helping to remove and/or mitigate hazards from their work areas.

Workforce risk tolerance behavior is continuously improved – reducing at‐risk behaviors and encouraging workers to never place themselves or others at risk and taking the necessary time to complete the job safely with the assistance of work aids, approved procedures, Job Safety Analysis (JSA) and Last Minute Assessment tools (Standback 5x5, STOP, JOBS).

• The importance of following approved procedures is emphasized to prevent an Erosion of Standards environment ‐ no task should ever be executed without following the established work management practice, task procedure and adhering to specific Job Safety Analysis (JSA).

• It is imperative to obtain and sustain a workplace culture where everyone is obligated to intervene if they observe a colleague placing themselves or anyone else at risk. This requires an environment where everyone is willing to approach others and interventions are welcomed when an at‐risk situation occurs.

• All project workers receive comprehensive job safety training and must wear appropriate personal protection equipment. Depending on their assignments, many workers are also certified following their training to ensure they can perform their job functions correctly and safely (e.g., work in confined spaces, operating special equipment).

• Workers and their supervisors also receive intensive training in the reporting of near misses and workplace hazards. These reports of “accidents that did not happen” are especially valuable since they help identify prevention measures before anyone has been hurt.

• An intensive project‐wide accident prevention effort includes both workers and project‐area communities. Road safety has been a particular emphasis, and therefore the accident prevention efforts include training in defensive driving techniques, emphasizing safety awareness in community meetings, distributing posters, stationing flagmen at key intersections, posting road warning signs, placing speed bumps at the entrances to villages, and installing vehicle speed governors.

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CONTEXT: ACCIDENT RESPONSE, INVESTIGATION & FOLLOW UP

When an accident does occur despite these and other prevention measures, the project’s incident response and investigation procedures are activated.

The project applies a standard process for all accidents, whether or not they fall within the project’s OSHA‐based safety performance reporting guidelines. The process includes initial emergency response, thorough cause investigation and analysis, and follow‐up actions aimed at trying to prevent future similar accidents.

The response procedures first ensure an immediate and complete emergency response. The response procedures provide for rescue equipment, trained medical personnel, management representatives, accident investigators, local law enforcement authorities, and other on‐scene needs as appropriate to the seriousness of the accident.

Root Cause investigations are conducted for all accidents, even small ones, in order to identify and document safety prevention lessons for the future. For major accidents, a team of experts and managers is assigned to perform fact finding and analysis.

The investigation teams conduct a formal analysis of the various factors that contributed to the accident. Accidents usually involve several contributing factors and it is important to identify all of them. The internationally‐recognized approach called “TapRoot Analysis” is generally used for this cause identification and evaluation procedure. In many cases, especially if an accident is felt to have high potential for developing new prevention methods, a “fresh eyes” investigation team follows up by reviewing and auditing the findings of the first team.

Project accident investigations produce a list of recommendations aimed at preventing future similar accidents. Remedies may include such steps as enhancing worker training, revising equipment procedures, and correcting local conditions that may have contributed to the accident.

Project safety advisors make sure that the lessons learned get to the field through an array of techniques that includes toolbox training meetings at the start of the work day, safety posters, accident alert bulletins, increased emphasis in training and certification programs, and in some cases community awareness sessions.

Depending on the circumstances, the accident response and follow up process also may include meetings with accident victims and their families, with local authorities acting as facilitators and witnesses.

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CONTEXT: STANDARDS FOR SAFETY REPORTING

Measuring Safety Performance

The tabulation and statistical analysis of accident reports plays a crucial role in accident prevention efforts for large industrial projects like the Chad/Cameroon Development Project.

Like many other companies, ExxonMobil has selected the widely recognized U. S. Occupational Safety and Health Administration (OSHA) guidelines as a standard for measuring safety performance worldwide. Thus, statistics from the project can be compared with those from other company locations.

OSHA guidelines are also widely used by many other oil companies and a number of similar industries, thus providing additional benchmarks that can help measure the project’s safety performance.

In addition to worldwide application of the stringent OSHA guidelines, Esso also complies with any local requirements for compiling and reporting accidents and accident statistics that may be in force in the countries where it operates. Therefore, the project maintains and analyzes an extensive range of safety statistics, even though the governments of Chad and Cameroon have not yet adopted detailed safety standards similar to those found in industrialized nations.

Transparency of Results

Immediate accident reporting by the project to authorities in Chad and Cameroon is consistent with, and in some cases superior to, transparency practices followed in most industrialized nations.

All major accidents, including ones that fall outside the OSHA accident reporting guidelines, are immediately reported to local authorities for investigation. Local law enforcement authorities generally are on the scene shortly after a major accident, and the project cooperates fully in all police investigations. Thus, the project’s reporting of accidents is much the same as in the U. S. and many other countries, where police, fire or other emergency agencies are called to major accident scenes.

In addition, the project’s OSHA‐based safety performance statistics are published in these Project Update reports. As indicated in the Preface, the reports are posted on the Internet (www.essochad.com) and hundreds of printed copies are distributed to a wide array of stakeholders, including NGOs, the two host countries, as well as the international community.

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Consultation & Communication As part of its standard practice, the project held hundreds of consultations in Chad and Cameroon in 2012 in communities near project areas. The sessions covered a wide range of topics, including outlining a new claims process in the Oil Field Development Area (OFDA), educating villagers about the hazards of setting brush fires along the pipeline in Cameroon and an AIDS education campaign along the pipeline in Chad.

The Cameroon Pipeline and Steering Committee (CPSP) and COTCO are committed to conducting joint village inspections every month, with the goal of visiting every village along the length of the pipeline in Cameroon at least three times per year.

In both countries, the consultation sessions help keep everyone abreast of current issues and ensure steady contact and open communication between the project and its neighbors. For more information on public health‐focused consultations conducted by the project, please see the section on Health.

Consultation Meeting Tally

Q1 2012 Q2 2012 Q3 2012 Q4 2012

12 Month Total

Chad

Sessions 20 47 164 31 262

Attendees 791 4,839 1,370 2,815 9815

Cameroon

Sessions 195 253 155 207 810

Attendees 2,576 4,022 1,716 1,809 10,123

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Consultation & Communication

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PROJECT OUTLINES A NEW PROCESS FOR HANDLING CLAIMS IN OFDA COMMUNITIES

In Naikam, a small village in the heart of the OFDA, an EMP team discusses the new streamlined claims process that they have put into place, benefitting the community and the project. The new process is one of several changes within EEPCI’s EMP department that have reduced its claims backlog by 80%. During the meeting ‐ like hundreds of meetings the project conducts within the OFDA each year ‐ two members of the EMP team work with a Local Community Coordinator to cover a number of relevant topics and answer any questions the villagers have in addition to the claims process. For more information about the recent changes in the Chad‐based EMP department, please see the section on Land Use in the Oilfield Development Area.

“We all learned something today. Even though they weren’t on the agenda, some of the other topics that we had questions on, such as eligibility for resettlement, were made clear today. The new claims process is a good one because the chief is now involved, which means that we can help advocate for our people. Having the guys come by to our village was a privilege for us so early in the new year.” ‐ Ngartombaye Balise, Chief, Naikam Village (upper right)

“I think today’s session was excellent. Everyone received our messages well, asked good questions and seemed to appreciate the meeting. The timing was right to discuss all of these topics as there will be some project work happening in this area. As a Community Coordinator, these meetings are satisfying for me because I can help these people – many of whom are friends and relatives – get the right information.” ‐ Nodjiram Ndoloum Bonheur, Local Community Coordinator, Komé Canton


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PROTECTING THE PIPELINE BY EDUCATING VILLAGERS ABOUT THE DANGERS OF BRUSH FIRES

Last year, the project held a meeting in Dompta Village, just outside Pump Station 2, to highlight the potential dangers of brush fires. It’s a common practice in both Chad and Cameroon to set brush fires for hunting, grazing and farming purposes. In Cameroon, the practice is illegal but the law is rarely enforced, and many villagers in remote areas are not even aware of the law. Meetings like this one are held every year at the beginning of the dry season to educate villagers about the environmental, safety and health risks of burning brush, as well as the potential for negatively affecting project infrastructure, e.g., pipelines and fuel tanks. For more about project efforts to maintain pipeline integrity, please see the section on the EMP Monitoring & Management Program.

Brush fires, often set to stimulate growth of new grass for cows to eat, can be uncontrolled and hazardous.

“In the dry season, we usually burn a perimeter around our farms to protect from outside fires. We, who are here attending this meeting, understand the message that it is not good to make fires, but it is not easy to change everyone’s mind. However, I will do my best to be an ambassador to help spread the message.” ‐ Gadji Pierre, Farmer, Dompta Village (above right)

“While we’ve never had any facilities damaged by fire, one can imagine the risk of fire coming close to an area where even cell phones are prohibited. Because this is such an old tradition, it may not be possible to stop all burning along the pipeline, but thanks to these consultations, we have already seen reductions in the amount of brush burning, especially here in Dompta.” ‐ Djika Mbele, Community Relations Officer (not pictured)


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CONSULTATIONS: OPPORTUNITIES FOR VILLAGERS TO MAKE THEIR VOICES HEARD

The Cameroon Pipeline and Steering Committee (CPSP) and COTCO are committed to conducting joint village inspections regularly, with the goal of visiting every village along the length of the pipeline in Cameroon at least three times per year. The visits are a valuable opportunity for villagers to interface with project representatives and government advocates, ask questions and raise any concerns they might have. Once a concern, or grievance, is raised, COTCO officially records it and begins to work with the village and CPSP to develop a solution that is acceptable to all parties, with CPSP advocating on the villagers’ behalf.

Above, during a routine consultation in the village of Mboko near PS2, the chief (above, center) took the opportunity to request an additional water well for his village. He explained that while COTCO had previously delivered a well and school classroom to the village as part of its community compensation program, more access to water was needed for this village of 600. Since Mboko is not eligible to receive additional community compensation at the moment, the project’s CRO, Djafarou Garba (pictured above, on left), will recommend that Mboko participate in a recent community investment program by COTCO, which is installing dozens of new water wells in communities along the pipeline. For more about this program, please see the section on Community Investment.


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Women wait in line to retrieve water from the town’s only well, previously installed by the project.

“Meetings like this one are helpful because we have received information and made requests, and COTCO has listened. COTCO solved the problem of the original water well, but our village is so big that one well is not enough. If the women don’t arrive early enough they get no water. We are very happy to hear about this new water well program, and we are confident that the company will make a good effort to help us.” ‐ Dogari Idrissou, Chief, Mboko Village

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Compensation Compensation paid to individuals for land use by the project in the last four quarters totaled over 750 million FCFA (over $1.5 million) in cash and in‐kind payments. Almost 15.5 billion FCFA (over $30 million) in individual compensation for land use has been disbursed since the project began. While all major project infrastructure construction was completed some time ago in both Chad and Cameroon, the project still has ongoing compensation commitments that it maintains.

An increase in compensation in Cameroon was recorded in the third quarter, due to tree cutting activities in Belabo. However, compensation commitments in general have been stable for years at levels well below those from 2000 to 2003, when construction was underway for the central oilfield facilities, the initial oilfield development, and the export pipeline system.

Tally of Individual Compensation (Millions FCFA)

Q1 2012 Q2 2012 Q3 2012 Q4 2012

12 Month Total

Project to Date

Chad 155.0 326.0 107.3 152.7 741.0 9,724.0

Cameroon 2.0 2.3 20.3 2.6 27.2 5,735.0

Project Total

157.0 328.3 127.6 155.3 768.2 15,459

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Compensation

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TREE CUTTING: COMPENSATION FOR BELABO FARMERS

The project compensates residents for the temporary and permanent use of land, and also for trees that must be removed from a particular section of land. Compensation rates were originally agreed upon by the project, the World Bank, local NGOs, and the governments of Chad and Cameroon, the payment scale taking into account the age and type of tree.

When crop‐producing trees near the project’s airfield at Pump Station 3 in Cameroon grew tall enough to interfere with flight activity, the project needed to remove them. Individuals from nearby Belabo Village who farm the land were consulted about the issue and agreed to a plan to compensate them for the loss of the trees. Today, the farmers still work on the land growing maize, plantains, peanuts and potatoes – none of which grow tall enough to interfere with the airfield’s landing approach. While the farmers previously produced greater yields per square meter from their mature mango, coffee, banana and palm trees, the compensation for their removal provided them with more money than they typically could earn in several years.

“When we heard about the tree cutting and associated compensation, this was very good news for us, as we received more for our trees than I could ever hope to earn in several years! The compensation process and prices were fair and provided us with a lot of advantage and profit, and I was able to invest some of it into my other agriculture business.” ‐ Djonkolo Thomas, farmer, Belabo Village (left)

“For years, we never knew the trees would need to be cut. In the past, other companies have taken our land without any compensation, so we feel very happy, because we had no idea that a company could come in and compensate us for the land like this.” ‐ Adang Athanase, Chief, Belabo Village (right)

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Land Use in the Oilfield Development Area In 2012, the project achieved its lowest land use footprint in years and reduced its backlog of land and compensation‐related grievances by 80%. These achievements were the result of significant revisions in the project’s land management plan and recent restructuring of the Environmental Management Plan Department. In addition, a successful supplemental community compensation pilot project created a productive rice field in Dokaidilti and opens the way for more similar fields to be created around the Oilfield Development Area (OFDA).

SUPPLEMENTAL COMPENSATION: A SUCCESSFUL PILOT PROJECT IN DOKAIDILTI

The village of Dokaidilti produced six tons of rice in 2012 even though it cultivated just 25% of the new field the project created through its supplemental community compensation program. Phase I of the pilot project involved clearing and preparing 3.5 hectares of land, and providing seeds and insecticides. In addition, farmers received on‐field training in planting, seed strategy and pest management.

The project’s supplemental community compensation program augments existing compensation programs by providing impacted villages in the project area with development projects to make up for diffuse and hard to quantify indirect impacts.

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Land Use in the Oilfield Development Area

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With plenty of seed and experience from this year’s harvest, the farmers are looking forward to planting all 14 hectares in the next rainy season, which begins in May. The project will provide an additional year of follow‐up support, including pesticides, further training in production, accounting and storing produce. The success of this project has prompted plans for additional rice fields in other communities around the OFDA. Below, the chief of Dokaidilti and several members of its farmers’ association survey their recently harvested rice fields.

“When it was time for our supplemental compensation, the project brought us a catalog with several options, and from these, we chose the rice field. We chose this because we knew we would have enough water to run the field from the nearby river. We are looking forward to the follow up training that will teach us how to manage our production and finances for the future. Our production exceeded our expectations, and we hope to get an even earlier start on next season so we can guarantee an even stronger year. Allowing us to choose our compensation project shows that the project cares about implementing projects that are most helpful to our community.” ‐ Ngardissal Emmanuel, Chief, Dokaidilti (above, right)

“We chose the rice project for our community’s supplemental compensation program because the soil for our existing millet and sorghum farms was weakening. With rice however, if we get good rain, we know we will get good production. This year, we sold all the rice to other villages and will reinvest the proceeds into the farm. Traditionally, we just sowed the seeds in a random pattern, but this new planting technique makes it easier to maintain the fields and harvest the rice.” – Dokaidilti Association of Farmers (preceding page)


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REINFORCEMENT COMPENSATION: A SAFETY NET FOR SUCCESS

While, the project’s resettlement compensation program has been successful in restoring or improving livelihoods in at least 75% of cases, the remaining 25% have required further reinforcement training, equipment and/or livestock. In 2012, the project focused its efforts on helping individuals who had previously received resettlement compensation for their land, but continued to struggle. Today 13 of 18 of these individuals are making good progress in restoring their livelihoods, and the project continues to work towards solutions for the remaining individuals.

In each case, the project developed an individualized approach to engage the farmers in the process and provide them with the training and resources they need to ensure long‐term success. Villagers received new livestock and/or training in new farming practices. In Bendoh Village, four were eligible for this reinforcement program.

“For a farmer, the most important thing is land, but I don’t have enough land and that is why the project is helping me. When my new cow grows strong, it will be able to plow with the older cow I received with my first compensation. Then I will rent it to make money. If the project forgot about me, I would have never received this reinforcement. But they haven’t, and I want to say thank you for that.” ‐ Gossegoto Rahab, Bendoh Village

“One of the cows from my first compensation died, so the project has returned to reinforce me with sheep and training on how to keep my sheep healthy. This has been very useful as I have treated the sheep successfully five times in the last five months. I hope to be able to sell one or more of the sheep to buy a scholarship, medicine or even another cow.” ‐ Larlem Micheline, Bendoh Village

“I believe that the project is helping our people. With the ability to make money by selling livestock, people can now go to the hospital when they are sick. Even if only a few people need reinforcement, it helps the entire village as everyone now has access to this equipment.” ‐ Noudjindóloum Salomon, Chief, Bendoh Village


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SUPPLEMENTAL COMPENSATION: A NEW FLOUR MILL GIVES WOMEN MORE INCOME AND TIME

A new grain mill has transformed the lives of Missimadji Village women in the OFDA. Instead of spending hours a day engaged in backbreaking work to produce flour by hand, the women are now able to focus on other obligations and tend to their children. The village received the new grain mill as part of the project’s supplemental community compensation, which offsets less tangible land‐use impacts from production activities. The new mill will also generate income that will be used to support teacher salaries at the village’s project‐built school which was delivered through the same program in 2006.

During the selection process, the project met with villagers of all ages to discuss their compensation options. After several consultations, the groups decided on the mill. When the building was complete and the equipment installed, the project trained the community management committee to operate and manage the business.

“The choice for us was very easy in this case, because we already had a school and traditional water well. This will make it easier for our women to prepare their grain and give them more time to do other things. The school and the mill are connected because the school helps bring education to our children, and the flour mill helps pay for the teachers for the school.” ‐ Ngaraissem Prosper, Chief, Missimadji Village (not pictured)

Everyone here is happy about the mill. Before, it could take up to two days for us to go to Doba or Komé to process our grain. And using traditional methods, it might take three hours to prepare enough grain for one meal. With the mill, we now have more time to clean, care for our children and visit relatives. Training sessions have been very helpful for us to operate and manage the mill and its proceeds responsibly. It’s good to know that the project is going to continue to monitor our progress to make sure that we are applying what we’ve learned properly.” ‐ Koutou Martine, President, Missimadji Mill Management Committee


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SUPPLEMENTAL COMPENSATION: NDOHEURI VILLAGE BREAKS GROUND ON A NEW CLASSROOM

The village of Ndoheuri recently broke ground on the construction of a new classroom provided through the project’s supplemental compensation program. In time for the new school year, the building will provide a year‐round, permanent classroom ‐ a welcome change from thatch and natural wood classrooms that were often damaged and destroyed during the rainy season, and interrupted studies with prolonged cancellations.

“Today, we are digging holes to place a foundation. Then we will pour concrete here to make a strong foundation. I live in a nearby village, and some of our children come to school here every year. So I know our children will appreciate going to a school like this. This work is difficult because of the firm soil in the area. But it is worth it because we hope we can have this school for a long time. So we dig hard to make sure we reach the right level for a strong foundation.” ‐ Masdingam Christian, construction worker

“We always think first about a school because schools provide education and help open minds. We chose the classroom, so it is not so hard to rebuild the old thatch schools every year. With the mill we received for our first compensation and this school, we can say that the compensation process has been good for us, especially because we have been able to choose our projects. We have a good relationship with the project here, and we want to continue to build on it.” ‐ Ndouba Daniel, Chief, Ndoheuri Village


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PROJECT‐DONATED ROAD CONNECTS VILLAGES

Mekapti and other nearby villages in the OFDA now have a permanent and durable road to facilitate commerce and travel. The road, which was originally built by the project for its own use, was no longer needed for production activities. In keeping with standard practice, land taken by the project that is no longer being used must be returned to its original state. In this case it was mostly undeveloped farmland. However, during a series of village consultations, EMP representatives learned that the people in the local communities preferred to keep the road because it had improved year‐round access to other villages and Bébédjía, a regional hub for their commerce and medical needs.

With the old path, we were forced to travel by foot, because even if you had a bicycle, it was so sandy that you would have to walk for some of the time, and during the rainy season you might even have to carry your bicycle across the mud. Now when someone is sick, they can easily get to the hospital, and we can use bicycles, motorcycles and even ox carts to get our goods to the markets. When it used to take us six hours to reach Bébédjía, it now can take only 1 hour.” ‐ Mbaidjé Benoudji, Mekapti Village elder

“Esso came to us and asked us what we thought about the reclamation of the road, and we told them that we preferred the road and we asked

them to keep it. We feel that the project has respected our opinion here.” ‐ René Benadji, Chief, Mekapti Village


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A REVISED LAND MANAGEMENT PLAN LEADS TO MAJOR IMPROVEMENTS

A revised land management plan and restructured EMP Department in Chad facilitated several key project accomplishments in 2012:

1. Land return

The project’s footprint by year end 2012 was its lowest in years, the result of a heightened focus on quickly returning unused land. Over 540 hectares were identified and returned to OFDA residents in 2012 – more than double the original target.

The land was returned when it was determined it would not be needed for construction or access to additional infrastructure such as wellpads and flowlines. The project has set its target for returning unused land to 250 hectares for 2013.

2. Grievance Management

The number of outstanding grievances related to land compensation and return was reduced by 80% in 2012. An improved land tracking system provides real time database and mapping of land parcels, allowing the EMP team to quickly track, analyze and resolve cases.

3. Revised Procedures

After a comprehensive self‐assessment, the EMP Department revised the document that guides land management activities in the OFDA. To reflect changing dynamics in the OFDA, more than 30 major changes were implemented. Key highlights include:

Clarification of roles to simplify workflow and allow faster decision‐making.

Changes in compensation and training programs to better serve OFDA villagers.

Improved reporting practices which better incorporate feedback from the World Bank and NGOs.


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LAND RECLAMATION & RETURN: DECREASING THE TOTAL LAND USE FOOTPRINT

Using an array of land reclamation techniques, the project has decreased its total land use in the Oilfield Development Area by 411 hectares – its lowest level in seven years, since the Land Use Management Action Plan began. Although the continuing program of drilling to fully develop Chad’s oil resource has required acquisition of additional land in each of those years, the project has worked to reclaim and return unneeded land to more than offset the new land requirements.

As the graph above shows, the total project land footprint in the six oilfields of the Oilfield Development Area has been reduced to 2238 hectares. The project’s land reclamation and return initiatives have outpaced the land requirements of the extra drilling by returning over 1983 hectares of project‐use land to farmers since the land reclamation program began.

Permanent Facility Land


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CONTEXT: BACKGROUND ON LAND USE & COMPENSATION

History of EMP Compensation Programs

All land users and villages have been compensated according to the Environmental Management Plan that was approved prior to project construction.

Since construction began in 2000, the project has compensated nearly 13,816 individual land users for more than 7261 hectares of land in 436 villages along the entire length of the project from the oilfields in Komé, Chad, to the terminus of the export pipeline at Kribi, Cameroon.

In the Oilfield Development Area, individual land user compensation has been paid for more than 4222 hectares of land involving just over 7038 individuals. The project has thus utilized at one time or another about 4.2% of the 100,000 hectares of land in the Oilfield Development Area. When all temporary construction use land has been returned, the percentage of use will be just over 1.5% of the 100,000 hectares.

The project’s compliance with the EMP compensation requirements has been documented in these Project Update Reports and by the World Bank’s External Compliance Monitoring group and International Advisory Group. (For statistics on the latest compensation for land use, see the section on Compensation.) A set of principles set out in the EMP have guided the compensation effort, including:

A transparent compensation procedure so that all village residents can see that no other resident is gaining an advantage over others.

Sensitivity to cultural practices and local legal requirements. Most land is controlled by the village and allocated by the local chief. In Chad and Cameroon, nearly all land is legally owned by the state. So farmers, rather than owning land as is commonly the case in Europe or North America, are entitled only to use the land for crops. The project therefore does not buy land but compensates the farmer for labor and lost crop opportunities, as provided in the EMP.

The recording of all compensation transactions. Each payment is archived with a photo of the transaction and the recipient’s thumb print.

Avoiding or minimizing resettlement of households through project redesign and by offering two resettlement alternatives: improved agriculture training and off‐farm employment training.


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History of the Land Use Mitigation Action Plan

As the three original oilfields were being developed, and results began coming in from the completed wells, it became clear that more wells would be necessary to develop the Doba region oil. This additional drilling and the infrastructure needed to produce the oil and to supply electricity to the wells, was consuming more land than originally anticipated.

The project’s efforts to address this land use situation began in mid‐2005, when it declared a Level II Non‐compliance Situation regarding the pace of reclamation and return to communities of temporary use land as specified in the EMP.

In early 2006, the project freed the necessary construction resources to begin clearing the land reclamation backlog so that the land could be returned to villages for agricultural use.

In June, 2006, the authors of the Chad Resettlement and Compensation Plan Evaluation Study, Drs. Robert Barclay and George Koppert, collected field data for an independent study jointly commissioned by the project and the World Bank’s International Finance Corporation.

By the end of 2006, based on the study, the project had developed an initial mitigation action plan and began implementing it.

The final Land Use Mitigation Action Plan, adopted in April 2007, enhanced the initial plan through collaboration with the Environment and Social Development Department of the International Finance Corporation. For the full text of the finalized Action Plan and associated documents, see the project website at www.essochad.com.

By early 2008, a team of experts assigned to implement the Land Use Mitigation Action Plan had completed all of the first year work commitments outlined in the plan.

By the end of 2010, all work had been completed in the nine work categories in the original plan, and the components of the Land Use Mitigation Action Plan were being integrated into the project’s day‐to‐day land acquisition processes.

In 2011, the project launched a new phase of improvement for its land use mitigation work in the Oilfield Development Area, creating enhanced land use impact assessment tools to respond more quickly to the constantly evolving circumstances of affected individuals and villages.

2012 saw revisions of the project’s land management plan and the restructuring of the EMP Department in Chad. These changes resulted in an increase in the rate of return of unused land and a major reduction in the number of outstanding grievances related to land compensation and return.

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Local Employment At year end, over 6,300 Chadian and Cameroonian nationals were employed by EEPCI, COTCO, TOTCO and their contractors – representing almost 90% of the total project workforce. Almost 80% of those Chadians and Cameroonians working for the project are employed in semi‐skilled, skilled, supervisory or executive jobs. In December, the project reached a major milestone with its ongoing efforts towards nationalization, with the entire field export system in Cameroon now being operated by a completely Cameroonian workforce.

THE ONSHORE EXPORT SYSTEM IN CAMEROON: NOW 100% OPERATED BY NATIONAL WORKERS

The project’s onshore pipeline transportation system in Cameroon is now operated entirely by Cameroonians, a major milestone achieved by COTCO in December 2012. The system includes two pumping stations to transport crude the nearly 1,000 kilometer route from Cameroon’s border with Chad to a pressure reducing station and at the coastal city of Kribi.

The effort to nationalize the project’s workforce in Chad and Cameroon was initiated before oil began to flow, and has been a core element of the project’s long‐term strategy. The success of the nationalization program is significant because many positions are highly‐skilled or supervisory and have some of the highest wage classifications. The program includes intensive classroom training, post training mentoring on‐the‐job and international assignments to broaden experience.

9

Local Employment

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Maintenance Area Superintendents, Jethro Kwetcheu and Jules Wack Mballa, are the most recent Cameroonians to replace expats along the export system. Responsible for all operations at the two pumping stations and along hundreds of kilometers of pipelines, they have become mentors for those following in their footsteps.

Kwetcheu’s deep operational experience on the project helps him in his current role as Superintendent of Maintenance Area 2 (see project area map on page 9). He was first hired by COTCO twelve years ago as a pump station control room operator, two years before oil first flowed through the pipeline.

Wack Mballa was recently promoted to manage all operations in Maintenance Area 3, which includes a pump station and several hundred kilometers of pipeline north and south of the town of Belabo. A civil engineer with a Master’s degree in Business Administration, he has held a number of key safety, production operation best practices, planning and government affairs‐related roles within COTCO.

“COTCO spent a lot of time focusing on mentoring and training all of us ‐ I’ve traveled around the world for training. These constant efforts at training helped nationalization proceed on schedule. And COTCO will continue to develop more people, as the company adapts to new challenges ‐ additional producers shipping their crude through the pipeline, staff retirements and ongoing nationalization efforts on the Floating, Storage and Offloading Vessel (FSO), and in our headquarters in Douala.

“The way we conduct business ‐ treating people fairly and leading in safety, training, community investment, operational excellence and ethical integrity – impacts other businesses in this country. This is important because for me, our reputation runs this business, and everybody here rises to our reputation.” ‐ Jethro Kwetcheu, Maintenance Area 2 Superintendent

“From an external perspective, the nationalization objective may have seemed very rapid, but it was very structured and responsible,

so we were able to move quickly without any impact on our business performance. This is because from the very beginning, all

of the company’s plans took into account that expats would eventually be replaced.

“I believe the country has benefitted immensely from COTCO’s presence here – even beyond the financials. We are market leaders in many operational areas and other companies are even starting to learn from COTCO, as they recognize that we can offer much safety and operational expertise. It is intangibles like these that

may even be as significant as our contributions to Cameroon’s tax base.” – Jules Wack Mballa, Maintenance Area 3 Superintendent

Local Employment

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LOCAL EMPLOYMENT STATISTICS

WAGES

The project’s contributions to its host countries’ economies in 2012 included wages paid to Chadians and Cameroonians of almost 71 billion FCFA (over $139 million).

Wage payments to Chadian workers for the third and fourth quarters of 2012 totaled just over an estimated 30 billion FCFA (almost $60 million).

Wage payments to Cameroonian workers for the third quarter of 2012 totaled an estimated 1.9 billion FCFA ($3.7 million). For the fourth quarter, wages were estimated at 2.3 billion FCFA ($4.6 million).

Total Project Workforce Quarter by Quarter1 (in Full Time Equivalents2)

Q1 2012 Q2 2012 Q3 2012 Q4 2012

Chad

Nationals 5,254 5,065 5,108 5,152

Expatriates 810 781 698 780

Total Chad 6,064 5,846 5,806 5,932

Cameroon

Nationals 1,090 1,144 1,218 1,150

Expatriates 69 73 49 47

Total Cameroon 1,160 1,218 1,267 1,197

Project Total 7,224 7,064 7,073 7,130

1. Estimates of wages and project workforce have been based on the latest available information and may be adjusted in future reports.

2. Also called FTEs. For more on reporting employment statistics using FTEs, see the context section at the end of this chapter.

NATIONAL WORKERS EMPLOYMENT SKILL LEVELS

Almost 80% of the Chadians and Cameroonians working for the project held supervisory, skilled or semi‐skilled positions at the end of 2012. A large percentage of supervisory positions are now held by Chadians and Cameroonians. Skilled jobs include such positions as control room operators, technicians for oilfields, construction, machinery, electrical and instrumentation, EMP monitors and welders. Examples of semi‐skilled jobs include food service assistants, security guards and welder helpers.

Local Employment

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CONTEXT: REPORTING LOCAL EMPLOYMENT

The Project Update Report now reports statistics on local employment on the basis of Full Time Equivalents or FTEs. Reporting by FTEs makes it possible to account for the wide diversity of work shifts and rotations of the project’s work force, as well as the seasonal variations in the types of jobs available with the project.

Many of the project’s workers are on rotator schedules, working in tandem with another “back to back” worker. Rotators typically work 28 days on and 28 days off or an analogous pattern, but when on duty they work seven days a week, 12 hours per day.

Other workers have day‐to‐day jobs where they work Monday through Friday shifts for shorter days but are on duty for most of the year with no rotation breaks.

Another category of workers, often hired from villages near project facilities, have temporary contracts and work only a few weeks at a time in order to complete special projects such as maintenance of the pipeline right of way.

Converting all these employee work patterns into standard Full Time Equivalents based on actual hours work yields a consistent and more accurate picture of the project’s local employment.

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Local Business Development In 2012, the project’s support of Chad and Cameroon’s economies through purchases of goods and services from local suppliers totaled 88 billion FCFA ($175 million).

In addition, COTCO has begun construction on a temporary camp for workers who will modify two sections of the pipeline in support of Cameroon’s Lom Pangar Hydropower Project which will facilitate the country’s business growth and overall development by significantly increasing its power generation capacity.

LOCAL BUSINESS SPENDING STATISTICS

Since the project began, its purchases of goods and services from local suppliers has totaled over 1.5 trillion FCFA ($3 billion), part of a continued commitment to support local businesses and follow the guidelines set forth by the EMP.

In Chad, spending over the last four quarters totaled 60 billion FCFA ($118 million), bringing project spending to date in Chad to an estimated total of over 985 billion FCFA (over $1.9 billion).

In Cameroon, spending over the last four quarters totaled over 28 billion FCFA ($57 million), bringing project spending to date in Cameroon to an estimated total of 528 billion FCFA (over $1 billion).

Project Spending with Local Businesses1 (In Billions of FCFA)

Q1 2012 Q2 2012 Q3 2012 Q4 2012

12 Month Total

Project to Date

Chad 18.3 18.0 11.8 11.9 60.0 985.1

Cameroon 6.0 5.3 7.5 9.9 28.7 541.2

Project Total 24.3 23.3 19.3 21.8 88.7 1,526.3

1. Prepared using the latest available data. Data for previous quarters has been updated to include late reported data.

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Local Business Development

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LOM PANGAR: SUPPORTING CAMEROON’S EFFORTS TO GROW ITS INDUSTRIAL CAPACITY

Last year, construction began on a temporary camp for over 200 workers who will modify two 13 kilometer sections of the project’s oil pipeline located in the Deng Deng forest, to accommodate one of Cameroon’s largest development efforts to date: the Lom Pangar Hydropower Project. In addition, the project has transported and staged over 1,800 sections of pipe which will replace the length of pipeline to be modified. The construction camp will be built, operated and dismantled – and the land restored – all within two years.

The hydropower project, a strategic priority for the country, involves building a hydroelectric dam at the confluence of the Lom and Pangar rivers in central Cameroon. The dam will create a 590 square kilometer reservoir in an area traversed by the oil pipeline. It is the first step to increase Cameroon’s electric generation capacity five‐to‐ten‐fold over the next 20 years to support the country’s burgeoning industrial growth. Below, workers stack the hundreds of sections of pipe which will soon be used to modify the pipeline.

“I’ve never worked on a project with such high environmental and safety standards. Each individual who works on this site must sign an environmental commitment pledge. This is important because Deng Deng is an amazing place, with baboons, gorillas and other rare primates, and the Government of Cameroon and COTCO have put in place these standards to protect this rare and valuable area. It will be interesting to come back several years after the camp is gone to see just how little lasting impact there was.” ‐ Victor Fosah, EMP Environmental Coordinator Contractor

Local Business Development

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TEN YEARS LATER: A LOCAL ARCHEOLOGY BUSINESS LAUNCHED AFTER CONSTRUCTION

Archeology services company, Vabioce Consulting Services (VCS), was started by some of the Cameroonian archeologists who examined the 1,070 kilometer long, two meter deep trench created during pipeline construction. Their story is one of many that can be told of Chadian and Cameroonian entrepreneurs who have taken advantage of opportunities created by the project to start their own businesses. One of the firm’s partners, Dr. Bienvenu Gouem Gouem, (center) was also one of three Cameroonian archeological students to receive a multi‐year scholarship from COTCO that allowed him to obtain his PhD at the University of Brussels in 2012. For more information about the scholarship program, please see the section on the EMP Monitoring & Management Program.

Below, right, ancient pottery fragments, which the team discovered at the site of the project’s Lom Pangar construction camp, await excavation. The team started their firm after realizing that their work on the project, one of the longest archeological transects in history, helped set a new standard for archeological responsibility on African infrastructure projects. Ten years later, they are involved in industrial projects in several countries and are currently working with the government of Cameroon on the Lom Pangar Hydropower Project.

It feels good to come back and work for COTCO after all the work we did with the company during construction. It’s easy to work with them because we know their regulations and requirements very well.” ‐ Dr. Bienvenu Gouem Gouem, Archeologist

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Health The project’s health‐related priorities in 2012 included both employee and community‐based initiatives. While villages along the pipeline route in Chad benefitted from an AIDS education campaign, the project also worked to empower women in the Oilfield Development Area (OFDA) to teach their communities how to prevent and treat malaria. Meanwhile, the project’s Medicine and Occupational Health (MOH) Department conducted diabetes and other screenings for staff, to help address emerging health issues brought into existence by improving socioeconomic conditions in Chad.

LEVERAGING WOMEN’S NETWORKS TO FIGHT MALARIA

Supported by funding from the ExxonMobil Foundation, three international NGOs have collaborated with the project to work with women’s cooperative associations in communities near the Oilfield Development Area in an effort to help fight malaria. Malaria No More, Africare and JHpiego have implemented a pilot project to train dozens of traditional cooperative women’s associations about malaria prevention and control. The women’s associations are a powerful vehicle for communications in the OFDA communities, since they can rapidly disseminate critical public information. These groups are now leading door‐to‐door bed net hanging campaigns, issuing regular reminders about the proper use of bed nets and providing training on how to recognize malaria symptoms and use anti‐malaria drugs.

“Because most of the victims of malaria are women and children, using women to spread the message is very effective as they can speak sister to sister, but also communicate to the entire community. It’s not too early to say that this project is already a success because I’ve seen and

heard many personal stories from people whose views on malaria have changed. For example, even now, many people think that witchcraft is the cause of illness and try to treat it using traditional methods, allowing many to needlessly expire. But already, some who previously thought this will go straight to the hospital when they see the signs of malaria.” ‐ Lelimboye Rachel, Women’s Monitoring Coordinator, Malaria No More

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Health

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RAISING AIDS AWARENESS ALONG THE PIPELINE ROUTE IN CHAD

In 2012, TOTCO, the project’s pipeline operator in Chad, organized an AIDS awareness campaign targeted to the communities along the pipeline from the OFDA to the Chad‐Cameroon border. In the five biggest villages ‐ Komé, Bessab, Kagpal, Mbaiboukou, and Béro ‐ workshops were attended by 500 to 1000 teachers, chiefs, administrative officials, students, parents and other community members.

TOTCO engaged a government medical specialist to help design the curriculum and teach the communities how to prevent and cope with AIDS. Hand drawings specially created by one of TOTCO’s employees brought the messages to life for the attendees.

“The changing economics of the OFDA has resulted in an influx of people looking for business and employment opportunities. Of course, this helps diseases like AIDS spread and as a result we thought it was important to conduct this campaign. The villagers really appreciated the messages, because for some of them, it was the first visit anybody had made to their villages to discuss AIDS. This makes sense because while awareness campaigns happen in big cities from time to time, it is rare for people to come into the more remote villages to educate them.” ‐ Ngar Asdjim, TOTCO Deputy General Manager

Health

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PROJECT ADDRESSES EMERGING HEALTH ISSUES IN CHAD

As part of its mission to keep thousands of employees informed about public health issues, the project’s Medicine and Occupational Health Department conducted an awareness and screening session for diabetes, high blood pressure and hypertension at its company headquarters in N’Djamena. With almost 60% of employees participating, the screening time was extended to accommodate everyone. While employees waited in line, medical staff initiated discussions with and answered questions from participants.

Hyperglycemia and high blood pressure were discovered in several employees who each received additional examinations and health counseling at the project’s health clinic.

Positive feedback from employees has prompted MOH to plan to conduct similar sessions on a quarterly basis. The project continues to implement other elements of ExxonMobil’s global “Culture of Health” medical initiative by encouraging employees to increase physical activity, practice better nutritional behavior and get routine checkups

World HIV/AIDS Day

As part of its annual participation in World AIDS Day, on December 1st, TOTCO held an HIV education presentation for all of its employees, which included remarks by the president of the Chadian National Council on AIDS and testimonies from individuals living with HIV. The project published a follow‐up article about the event in its employee newsletter.

“Even though infectious diseases are still a large problem in Chad, we are seeing a transition towards chronic diseases like diabetes, the result of changing socioeconomic conditions which enable a more sedentary lifestyle, particularly in N’Djamena. In the past people used to walk long distances and ride bicycles in Chad ‐ it would be rare for Chadians to have three meals every day. While this is the result of increased economic prosperity, there are downsides to this lifestyle.”

“In Chad, even if you see a doctor it is difficult for them to have enough time to explain things fully to patients, so our employees were happy to get this information as there was much that they didn’t know. We have the capability to diagnose and treat disease, but it is more important to prevent chronic diseases like this from happening in the first place. So rather than wait until we see complications from these health conditions in our staff, we decided to be proactive and raise awareness.” ‐ – Dr. Tog‐Yeum Nagorngar, MOH Manager

Health

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MALARIA INFECTION RATE (NON‐IMMUNE PERSONNEL)

The project achieved a malaria infection rate for non‐immune project workers of 1.13 cases per 200,000 work hours in 2012. Although a heavy rainy season led to a small increase in non‐immune malaria cases, the overall rate has been dramatically reduced over recent years owing to the project’s intensive malaria prevention initiative.

CONSULTATIONS AT PROJECT CLINICS

Project health clinics provided over 20,000 free health care consultations to workers in 2012 at project facility clinics, a valued job benefit in Chad and Cameroon where health care can be difficult to obtain, especially in rural areas. The bulk of this care involved illnesses or other health conditions unrelated to the workplace.

Consultations at Project Clinics

Q1 2012 Q2 2012 Q3 2012 Q4 2012 12 Month Total

Chad 4,658 3,526 2,376 5,193 15,753

Cameroon 668 725 1,638 1,478 4,509

Project Total 5,326 4,251 4,014 6,671 20,262

Project Worker Health Data

STDs1 SSS2 Events

(excluding Malaria & STDs) Hospitalizations/ Observations3

Medevacs

Q3 2012 Q4 2012 Q3 2012 Q4 2012 Q3 2012 Q4 2012 Q3 2012 Q4 2012

Chad 48 44 41 79 10 4 3 0

Cameroon 0 1 0 0 5 3 0 1

Project Total

48 45 41 79 15 7 3 1

1. STDs: Sexually Transmitted Diseases. 2. SSS: Sentinel Surveillance System, an epidemiological early warning system. Some examples of diseases tracked by the SSS include tuberculosis, dust exposure, meningitis, skin rashes and flu. The SSS focuses on additional diseases outside the two that have been priority targeted — malaria and sexually transmitted diseases. Trends in disease rates can help alert project health experts to a health problem before it reaches epidemic level. 3. Chad hospitalization data is from Komé 5 and Komé Base clinics only. N’Djamena clinic data not included.

Cases per 200k Work hours

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Community Investment A new building to provide emergency hospital services in Kribi, a program to install water wells in communities across Cameroon, and the launch of a second phase of a women’s empowerment initiative around the Oilfield Development Area (OFDA) were key highlights from the project’s community‐development investments in 2012.

AFRICARE AND THE EXXONMOBIL FOUNDATION: WOMEN’S EMPOWERMENT PHASE II

Positive results at the end of a three‐year, $1.5 million effort to build the skills and incomes of 58 traditional women’s cooperative associations throughout the oil producing region, have prompted Africare and the ExxonMobil Foundation to enter a second Phase of the Initiative for Economic Empowerment of Women Entrepreneurs. The Foundation has committed to maintain annual funding at $500,000 each year the program meets its goals. In addition to the training, equipment and microfinance activities initiated in Phase I, three new activities will be added:

1. Creating broader unions of associations to further empower members 2. Acquiring and developing land where associations can gather to do business 3. Providing funding for manual pumps for female farmers throughout the OFDA

“It is really joyful to see these women continue to grow and know that our efforts are helping them. Many of them have come from little or nothing at all, and helping these women succeed for themselves encourages us to continue our work with them. The partnership of EEPCI and the ExxonMobil Foundation

has made everything we’ve seen here possible. The women realize this and sing their praises as well.” ‐ Robertine Denodji, Africare Doba Project Coordinator; 2nd from left, with Africare’s Doba team

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Community Investment

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The initiative was originally developed after a study on poverty and gender equity issues in the oilfield region found that women didn’t have the same opportunities and resources as men, particularly in the following areas:

Limited access to credit and opportunities for generating income

Lack of exposure and training in newer farming and agricultural methods, which often limit households to subsistence farming

Restrictions on owning land, livestock and other assets

Restrictions on participating in decisions by local market committees

Low literacy rates and lack of business management skills

Cooperative associations are the traditional way village women have joined together in small business enterprises to earn money and help each other. Most villages have at least one women’s association cooperative. The Empowerment Initiative focused on these cooperatives by providing them with business training and counseling, and microcredit funding for raw materials to help them build inventory and expand their lines of business. Below, customers line up to have their grains processed by a women’s association in the town of Bitanda.

“We received the grain machine last year from Africare, and with the proceeds from it, we bought this rice processor this year. Before Africare, we had our own association, but we didn’t have enough to make ends meet. Africare came to us with financing, technical advice and training. Now, our 17 members have a better standard of living than ever before. With the profits, we do several things like educating our children, assisting other associations when necessary, and helping the whole village as we can. So, for all of us, the support of Africare has been crucial.” ‐ Lellar Elisabeth, President, Groupement Djarakoh de Bitanda


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KICKSTART: AN IRRIGATION SOLUTION USING HAND AND FOOT‐POWERED PUMPS

Kickstart, a new program funded by a $100,000 grant from the ExxonMobil Foundation, is being implemented by Africare as part of its Women’s Empowerment Initiative. The program is providing over 500 hand and foot‐powered water pumps to female farmers in the OFDA. These simple pumps represent a sustainable solution to traditional methods of delivering water to crops and an alternative to expensive gasoline‐powered pumps that many farmers cannot afford to operate. The pumps are easily portable and can be operated from nearby sources of water such as rivers, streams and man‐made water wells.

“We grow lettuce, eggplants, carrots and many other vegetables. These pumps make getting water much easier and less tiring than the traditional methods we used to use. When we used motorized pumps, we used to have to pay for and bring fuel to run them. This season, we plan to sell some of the produce to reinvest into our farming activities, and we will keep some for our members’ families. Our hope is that we can ultimately earn enough revenue from this garden to pay to educate all of our children, and we have to thank Africare for giving us the chance for this.” ‐ Achra Ndoudoubeu, Maraicher Al Sabour de Doba


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STRENGTHENING WOMEN’S ASSOCIATIONS THROUGH THE CREATION OF BUSINESS NETWORKS

Building on the success of the original Women’s Empowerment Initiative, Africare, with support from the ExxonMobil Foundation, has helped the 58 participating women’s associations in the OFDA form two broader business networks. These networks have designated locations for commerce, farming, processing and manufacturing their goods. Supported by member dues, the networks combine the power of the traditional associations into larger and stronger advocacy organizations. They also assist individual members with financial aid, technical support and training.

“Having a network like this helps our 600 members in 34 associations become even stronger collectively. We use the money we collect in dues to pay our staff and reinvest into the business. Before we were just in small groups, but between technical support, financing, monitoring and creating the networks, the work of Africare has really helped us.” ‐ Achta N’doro, President, Plate Forme Dénérabé de Doba (top left, selling goods to a customer)

“We have 24 associations representing 450 women. The network is important to help everyone work together and become stronger. We had thought about forming a network a long time before Africare, but it was too difficult to be in contact with and understand each other well. Many of the women in these associations are widows and this may be their only source of income.” ‐ Rokoulet Nekia Brigitte, President, Groupment Mbailassem á Bébídjía (left)


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A NEW EMERGENCY HEALTH CENTER FOR KRIBI’S DISTRICT HOSPITAL

Kribi’s District Hospital, built by the French during the colonial era, has a new emergency building, thanks to donations from the project’s pipeline operator, COTCO. The company, which had been making donations of medicine and supplies to the hospital for several years, developed the idea of renovating an existing building to create an emergency wing, but ultimately decided that a new, purpose‐built building would be more effective. Two emergency rooms, an administrative office, and a reception room will soon be available to provide life‐saving services to patients in need. In addition to funding construction costs, COTCO donated beds, exam tables, wheelchairs, chairs, desks, and medical supplies to fully stock the wing.

“As Kribi continues to grow from tourism and new industrial projects, the need for a dedicated emergency room grew as well, since our old facility was not set up to handle emergencies effectively. It’s a very rare and positive occurrence to have corporate support like this in Cameroon.” ‐ Dr. Ondoa, Kribi District Hospital (above left)


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A NEW WATER WELL FOR MBAMBO VILLAGE

Several years ago the village of Mbambo’s water well malfunctioned, requiring 10 minutes of pumping to return a trickle of fresh water. With no resources to repair the well, the village’s 500 residents were forced to travel a significant distance to get water from a traditional well and a river in the forest. When villagers turned to COTCO for help, the project responded by installing a new well which now provides water for everyone within a two kilometer radius.

The well was installed through a social responsibility program run by COTCO’s Public & Government Affairs Department, which constructed 20 wells around Kribi and Bélabo in 2012. Twenty more wells are planned for 2013 across Cameroon. Villages are selected on the basis of recommendations made by local administrative and traditional authorities.

The program increases access to drinking water, a key development objective for COTCO. It also includes a capacity building component, with actions focused on water well maintenance and sustainability, hygiene, water conservation, and basic sanitation near wells.

“We’ve been in contact with COTCO for a long time now because the company has come and visited our village directly several times. So when the chief came back from a meeting with the government and COTCO and told us that we had been selected for a new water well, we were all very happy in this village. We are very proud and we don’t know how to thank COTCO – this is the first company that we know of that is taking care of the population.” ‐ Ngoh Dieudonné, Assistant Chief, Mbambo Village


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GUINEBOR HOSPITAL: PROJECT SHIPS THREE CONTAINERS OF MEDICAL SUPPLIES FROM U.S.

Built in 2010 by the non‐profit organization, Cutting Edge Foundation, Guinebor Hospital relies on donations ‐ many of which come from the United States ‐ for critical medical supplies and equipment. To reduce the foundation’s shipping costs and simplify the logistics of transporting large quantities of medical equipment and supplies from the United States, EEPCI made a commitment to fund and facilitate the shipping of two containers of supplies each year exclusively for the hospital. To date, the project has shipped three containers to the hospital.

“The cost of shipping is one thing; the logistic capacity was equally important, and EEPCI organized it all right to our hospital compound. Shipping, customs, road transport through Cameroon and the crane to finally lift them into place ‐ all done as a gift to the people of Chad. All these things will really make a difference to the way that we are able to deliver care. So why not say, “Hallelujah, Praise God.” – Dr. Mark Hotchkin, Guinebor Hospital

With 1,000 new patients each month, the line for patients in need of the quality medical care provided by at Guinebor Hospital is a long one (left). EEPCI has already transported three 40‐foot containers of surgical and medical equipment such as ECG and X‐ray machines, medical furniture and wheelchairs.


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SCHOOL COMPETITION: COTCO AWARDS TOP HIGH SCHOOL STUDENTS WITH SCHOOL SUPPLIES

COTCO awarded 72 of the top students at the Lycée Classique de Belabo secondary school with prizes to reward them for their strong academic performances and encourage more of the same in the future. The prizes, which were awarded during a large ceremony to the top three students in each of the school’s 24 classes, included vouchers with which the students could purchase textbooks and other school supplies in time for the upcoming school year.

“As far as I know this is the first and only time that I have seen a company do this in Cameroon.” – Bian Salomon), Lycée Classique de Belabo

“The prize that I got from COTCO was very helpful to buy some of my books for this year. It was nice to receive the award during the big ceremony, and I am motivated to come first in my class again. I enjoy learning things like physics and mathematical functions, because since I found out what they do at NASA, I want to be an aeronautical engineer at a place like that. So I want to continue my studies abroad and then work as an aeronautical engineer at a top engineering institution.” – Tchelong Kwayeb Franck Carl, Student, 15, Grade Terminal, Premiere C Class


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THE WOMEN OF COTCO: INSPIRING YOUNG WOMEN TO PROFESSIONAL SUCCESS

Female employees from COTCO recently volunteered to deliver valuable health and career advice to young women who are beginning to think about the next steps in their lives. All of the women who participated are members of the volunteer organization formed and funded by some of COTCO’s female employees, The Association des Femmes de COTCO (ASFEC). The association focuses its efforts on helping underprivileged women and children through donations, education, mentoring and scholarship initiatives throughout the year.

When the association met with the entire co‐ed student body at Douala’s renowned secondary school, Lycée Bilingue de New Bell, a key objective was for the female students to hear these important messages coming from women. After discussing risks and prevention strategies related to HIV/AIDS, the women shifted their focus to careers for young women. Their goal was to show by example and anecdote that it is possible for women to hold leadership positions at major companies like COTCO, and also to provide information about developing career goals and mapping potential pathways for young women to succeed.

“Our first focus with this visit is to help students prevent AIDS, because it is such a big problem in Cameroon. Additionally, we really wanted students to see successful role models and help them understand pathways to success. And we use ourselves as examples that they can learn from – what schools we went to, what degrees we earned and any other choices that could serve as useful examples for the children.” ‐ Brigitte Mbongo, Aviation Coordinator, Member, ASFEC

“Seeing multiple ladies from one company shows it is not out of the ordinary for women to help run companies. So, we’d love to have

encounters like this multiplied, because this message is so important, and our children need more information as early as possible so they can think about how to make choices to achieve their goals.” ‐ Eson Ndumbe épse Nonog (Madame) Victorine, Principal, Lycée Bilingue

de New Bell

“In May I will graduate and I hope to get a career in logistics. There seem to be a lot of opportunities in that field because all companies need logistics people. I’m taking extra classes now to help me with the next step towards a career in logistics. It was nice that many of the ladies in ASFEC were former students here. So they really showed us that we can follow their path and be successful from this school.” ‐ Miyon Takafo Martine, student, 20

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Host Country Revenue The project has generated over $10 billion in revenues for Chad since oil began to flow in 2003, much of which the country continues to invest in Chad’s economic, social and cultural development sectors. 2012 marked another milestone for Chad’s petroleum industry as the country completed its first‐ever direct sales of crude on the international market through a royalty‐in‐kind arrangement with the project.

CHAD’S OIL REVENUE: IMPROVING FOOD SAFETY

Major construction has just been completed on the new headquarters for Chad’s Center for Food Quality Control, just one of the country’s latest investments of project‐generated oil revenue. With its sophisticated laboratory equipment to conduct biological and chemical testing of food products, the center’s goals are two‐fold: 1) protect Chadians by managing the risk of food‐borne illnesses; and 2) benefit Chad financially by facilitating exports and trading, thereby diversifying Chad’s revenue sources.

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“This is the very definition of the responsible application of oil revenue as the work that we do here will help provide safe and healthy food for the benefit of all Chadians. Our laboratory facilities will allow us to become a quality control hub for surrounding countries, and will help Chad generate additional income. Without oil revenue, there would be no activity like this in Chad.” ‐ Dr. Abakar Mahamat Nous Mallaye, Director General, Centre de Controle de Qualite de Denrees Alimentaires (CECOQDA)

Host Country Revenue

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CHAD’S OIL REVENUE: HELPING CHAD COLLECT, PROTECT AND SHARE ITS HISTORY

Visitors from around the world can now come to N’Djamena to study Toumai, the fossilized skull of the oldest known member of the human family, which was found in northern Chad in 2001. Dubbed ‘Hope of Life’ in the local language, this seven million year old fossil is on display at Chad’s National Museum in N’Djamena, completed in 2010 with the help of oil revenue. The museum helps fulfill Chad’s Ministry of Culture’s mission to collect, restore and conserve Chad’s artifacts and cultural heritage for future generations.

The National Museum is open to all visitors, free of charge, and features an impressive collection of cultural, historic and prehistoric objects. Perhaps most importantly, Chad now has a facility that can protect and proudly display Toumai, which experts agree will have a significant impact on the study of human origins.

“Our mission is to bring Chad’s cultural history to the people. Students can visit us any time to see and learn. This museum is the only site like it in Chad, and the only one in the world that contains seven million years of history.” – Narayam Ndissedibaye General Director, National Museum


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Chad’s Oil Revenue through 2012 (millions of U.S. dollars1)

Q1 2012 Q2 2012 Q3 2012 Q4 2012

12 Month Total

Project to Date

Royalties on Crude Oil Sales2

108 49 0 0 157 2,708

Royalties‐in‐Kind2 0 0 N/A N/A 272 272

Income Related to Pipeline Ownership

0 0 0 0 0 69

Corporate Income Tax3

340 381 264 322 1,307 6,643

Fees, Permits, Duties, Etc.4

18 12 15 15 60 500

Project Total 466 442 279 337 1,524 10,231 1. Rounded to nearest whole number. 2. Historically, this reflects cash payment royalties paid by all Consortium members However, the Government of Chad informed Esso of their willingness to take royalties‐in‐kind on December 22, 2009. Royalties in cash ceased as of May 1, 2012 and the Government of Chad’s first lifting took place on July 11, 2012. As a result, effective May 1, 2012 Government of Chad revenue is no longer reflected in ‘Royalties on Crude Oil Sales’. Royalties in Kind are estimated on an annual basis. 3. Corporate income tax amount includes payments made by Consortium members and TOTCO. 4. Project to Date has been restated to exclude amounts previously reported for services provided by government‐run entities, such as utilities, hospitals, and telecommunication services.

Doba Basin Crude Oil Market Price (by month in U.S. dollars per barrel)

Global oil prices in recent years have been higher than expected, significantly increasing revenue to Chad. Although prices have been volatile at times, since 2008 the price per barrel has averaged over $80, more than double the price when oil exports first started in 2004.

Average Price: $84.43


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CONTEXT: HOW CHAD EARNS ITS REVENUE

Chad’s oil project revenue includes four main streams of money:

1. Royalties on Sales of Oil: Chad receives a royalty paid by Consortium members on the gross sales revenue from crude oil after deducting the cost of transporting the oil to market through the export pipeline:

The royalty on oil from the three original oilfields covered by the 1998 convention is 12.5%. The 1998 convention also includes the Moundouli and Nya satellite fields.

The royalty on oil from Maikeri and Timbré, oilfields covered by the 2004 convention, is 14.25%.

The Government of Chad informed Esso of their willingness to take royalty‐in‐kind on December 22, 2009. As a result, royalty in cash ceased as of May 1, 2012 and the Government of Chad’s first lifting took place on July 11, 2012.

2. Corporate Income Tax: In 2006, Consortium members also began paying income tax on net profits from the original three fields. These payments started a major new source of revenue for Chad. This new revenue source commenced several years earlier than expected – a major benefit to the impoverished country. The early start stems mainly from two major factors:

The historically high prices for oil around the world over the last several years increased total revenues to levels higher than estimated during the project’s planning phase.

The higher Brent crude price is triggering a 60% corporate income tax on the original three fields as provided in the 1988 Convention (and a 55% tax on Maikeri and Timbré and 50% tax on Nya and Moundouli).

By law, the standard tax rate paid by corporations in Chad is 40%, much less than the 60% currently being paid by the Consortium on oil from the original three oilfields. Thus, the oil project currently has a much higher corporate income tax rate structure than other businesses operating in Chad.

3. Income Related to Pipeline Ownership: Chad owns a percentage of both pipeline companies, TOTCO and COTCO, and thus shares in the profits from fees these two companies charge to deliver Chad’s Doba crude oil to market.

4. Permits, Duties & Taxes: Various other sources also add to Chad’s income, including permits, duties, employee taxes, work permits and other fees.


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CONTEXT: CHAD’S FUTURE REVENUES MAY FLUCTUATE SIGNIFICANTLY

As noted earlier in this chapter, high worldwide oil prices of the last several years have yielded major benefits for Chad. However, there is no way to forecast with certainty the future volatility of the market or whether future prices will go up or down. In addition to world oil market prices, at least two other factors will have a potential influence on Chad’s revenue:

Calculations of the corporate income tax on the oil sale profits depend on depreciation of capital expenditures for new facilities and improvements over time, as set out in the oil conventions.

Despite the project’s investments in maintaining production, extracting oil from Chad’s oilfields has been challenging. Similar to other oilfields around the world, output declines as the oilfields mature.

For more on the project’s investments in maintaining production levels from the oilfields see the chapter on Production & Construction. For an illustrated explanation of the technical issues that hinder extraction of Chad’s oil and the steps taken by the project to deal with those issues see the section on Chad’s Challenging Geology in Project Update Report #24.

CONTEXT: WORLD BANK GROUP ROLE IN CHAD

In September, 2008, the Chadian Government paid off its loans from two of the five institutions that make up the World Bank Group, the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). In turn, the IBRD and IDA are no longer involved in the export pipeline project. The IBRD/IDA loans had partially funded Chad’s equity position in the two pipeline operating companies.

The World Bank Group remains involved in Chad through the International Finance Corporation (IFC). The IFC facilitated hundreds of millions of dollars in commercial financing for the project and directly loaned tens of millions of dollars to the two pipeline companies.

The contracts for these loans require ongoing compliance with and monitoring of the project’s Environmental Management Plan performance. The project paid off its loan in late December 2012 and is evaluating key areas where external monitoring should still be continued.

The IFC’s environmental staff continues its work, including trips to Chad for ongoing collaboration with project staff on the Land Use Mitigation Action Plan. For more information, please see the section on the Land Use Management Action Plan.

The IFC independent monitoring body, the External Compliance Monitoring Group (ECMG), continues its work.

Chad’s Revenue Management Plan remains in place even though the IBRD and IDA are no longer involved in the project.

A loan by the European Investment Bank to Chad includes the Revenue Management Plan requirements. That loan is still in effect.

Chadian law implementing the Revenue Management Plan continues in force.


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CAMEROON’S PIPELINE REVENUE

Cameroon obtains its project revenue primarily through transit fees from the export pipeline system that intakes Chad’s oil at the Mbére river where the Chadian portion of the pipeline ends. The Cameroonian portion of the export pipeline system then transports Chad’s oil to the Marine Terminal located offshore from the seaside town of Kribi. Although Cameroon has no ownership share of Chad’s oil, it does have an ownership share in the pipeline system. (None of Cameroon’s own offshore oil wells contribute oil to the export pipeline.) Thus, Cameroon’s revenue comes from four income streams.

1. Transit Fee: When the project agreements were first negotiated, Cameroon negotiated a fixed rate per barrel transit fee in order to have a secured flow of income rather than being at the mercy of sometimes volatile oil prices. The transit fee belongs 100% to Cameroon and is not shared with the other pipeline partners.

2. Corporate Income Tax: As for any other corporation in Cameroon, the pipeline company COTCO pays income taxes to the government of Cameroon.

3. Custom Duties and Other Taxes: Whenever the project brings goods into the country it must pay customs duties in addition to a variety of other taxes and permit fees.

4. Income Related to Pipeline Ownership: As a part owner of the export system pipeline, Cameroon receives a proportional share of the pipeline company profits.

Cameroon’s Oil Revenue Through 2012 (millions of U.S. dollars1)

2004 2005 2006 2007 2008 2009 2010 2011 2012

Project to Date

Transit Fees 24 27 23 22 20 18 18 17 15 186

Income Tax 0 2 4 2 2 3 10 9 10 42

Customs Duties and Other taxes

0 0 0 0 1 10 6 7 8 33

Income Related to Pipeline Ownership

16 15 14 14 13 7 10 9 9 108

Project Total 40 44 41 38 36 38 44 42 42 368

1. Rounded to nearest whole number

Documents

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