Chad became a net petroleum exporter after the Chad-Cameroon pipeline came online in 2003. Industry experts still consider Chad under-explored, and future oil discoveries could increase petroleum exports even more. Chad lacks refining infrastructure and relies on neighboring Cameroon and Nigeria for refined product imports, however, delivery problems often leave Chad faced with refined product shortages. Chad has no known natural gas reserves and neither produces nor consumes natural gas. Due to a lack of investment, Chad generates and consumes only small amounts of electricity, of which, 100 percent is conventional thermal electricity. In place of electricity, the majority of Chadians rely on biomass fuels such as wood and animal dung.

Cameroon has experienced a fairly steady decline in its domestic oil production over the past 20 years. The country is still a net oil exporter, but if new fields do not come online in the near future, Cameroon could become a net oil importer. Currently, Cameroon does not produce any natural gas, but the country has plans to develop its natural gas reserves for generating electricity in the future. The majority of electricity generated in Cameroon comes from hydroelectric power stations, though droughts can often leave the country dealing with electricity shortages.

Top Sub-Saharan Africa proven oil reserve holders, 2006. (Source: Oil and Gas Journal, World Oil)

According to Oil and Gas Journal (OGJ), Chad had proven oil reserves of 1.5 billion barrels as of January 2006. International oil companies (IOCs) first discovered oil in the early 1970s in southern Chad in the Doba and Lake Chad basins. Industry experts still consider Chad under-explored, with a high probability of locating new reserves in the future. As of January 2006, OGJ estimated that Cameroon had proven oil reserves of 400 million barrels, with the majority of reserves located offshore in the Rio del Rey basin of the Niger Delta. Less significant reserve deposits are located in the Douala/Kribi-Camp basins off Cameroon’s western coast, and onshore in the northern Logone-Birni basin.

Chad and Cameroon have been in the process of restructuring their oil sectors by developing laws and regulations that encourage greater investment. In 2000, the Chadian government revised its Petroleum Code. The revision allowed for production sharing agreements (PSAs) between foreign companies and the Chadian government. In addition, the government made the investment climate more attractive by reducing the corporate income tax rate from 50 percent to 45 percent. The Cameroonian government revised its petroleum laws to include financial incentives and tax breaks on exploration in both 1999 and 2002. Major players in both countries include ExxonMobil, Chevron, Petronas, Total, Shell, and Perenco.

In July 2006, the Chadian government created the country’s first national oil company (NOC), which is called the Société des Hydrocarbures du Tchad (SHT). As a result of SHT, Chad has indicated a desire to control 60 percent of the country’s oil sector. In August 2006, Chad’s Oil Minister, Mahamat Nasser Hassane, announced the possibility of revising a previous agreement with the ExxonMobil-led consortium, which controls the Chad Cameroon Pipeline Development Project (CCPDP). The revision would allow SHT to become the fourth member of the consortium. Also in August, the Chadian government issued a statement in which Petronas and Chevron were accused of not paying enough oil-profit tax due to a tax advantage agreement signed in 2000. The companies, which together control 60 percent of Chad’s oil sector, are partners in the CCPDP with ExxonMobil. After concluding negotiations, the two companies agreed in October 2006, to pay outstanding taxes for 2005 and 2006 totaling $289 million. The tax payment will allow both companies to continue working in Chad.

Over the past 20 years, Cameroon has experienced a fairly steady decline in its domestic oil production. Although the country has been well explored, Cameroon’s state oil company, the Societe Nationale des Hydrocarbures (SNH), believes that discovery and development of smaller fields is still possible. Renewed interest in oil investment has led to exploration in all three of Cameroon’s major petroleum basins – Logone Birni, Douala and Rio del Rey. SNH, which Cameroon has committed to privatize, engages in exploration and production in conjunction with several foreign oil companies, the largest being Total. In 2005, Total brought its Bakingili discovery online. The IOC also conducted exploratory drilling in three fields.

In December 2004, the Chadian government awarded oil exploration permits to Canada’s Energem Petroleum Corporation. The permits are for the Chari-Ouest basin, located near the Doba basin and Largeau basin, in central and northern Chad, respectively. In July 2006, Chad’s Oil Minister stated that the Chadian government has a target of releasing 20 oil blocks for bid in 2007. Chad hopes the new exploration will lead to increased production capacity of 400,000 bbl/d by 2010.

In 2005, SNH awarded Total the first production sharing contract (PSC) in Cameroon’s history for the Dissoni permit in the Rio del Rey basin. In 2006, Total announced that it struck oil after drilling its first well on the block. In 2007, Cameroon has plans to open a licensing round which will offer six oil blocks for bid in the Rio del Rey region. The blocks will be awarded under PSCs. In the medium term, Cameroon is expected to open a licensing round for the Bakassi Peninsula, which Nigeria agreed to withdraw from in June 2006. Industry experts believe Bakassi acreage could contain significant amounts of oil reserves as it borders areas in the Gulf of Guinea that, in the past, have yielded numerous oil discoveries.

The Chad-Cameroon pipeline. (Source: Esso Exploration & Production Chad, Inc.)

Since Chad is landlocked, the country’s petroleum production depends on its ability to access international markets through the Chad-Cameroon pipeline project , which was completed in October 2004. The pipeline runs 670 miles from Doba basin through Cameroon’s Logone Birni basin to the port of Kribi. Eighty-five percent of the pipeline is located in Cameroon. The pipeline’s capacity is estimated at 225,000 bbl/d. Export facilities in Kribi include an onshore-pressure reducing station and a subsea pipeline connected to a floating production storage and offloading vessel (FPSO). The Tchad Oil Transport Company (TOTCO) and the Cameroon Oil Transport Company (COTCO) have respective ownership of each country’s portion of the pipeline.

In January 2006, a dispute between the Chadian government and the World Bank occurred over the PRML. The Chadian government voted to allow additional oil revenues (surpassing the original 20 percent agreed to with the World Bank) to be allocated to the general budget. In response, the World Bank suspended loans to Chad and froze the country’s oil revenue accounts. After months of stalemate, and threats by the Chadian Oil Ministry to shutdown oil production, the two sides reached a compromise in July, with Chad committing 70 percent of revenues towards development programs. Chad can use the remaining 30 percent for government expenditures.

Since Chad currently lacks domestic refining infrastructure, the country depends on petroleum products imported from Nigeria and Cameroon. However, Chad is often faced with shortages of refined products, due to domestic fuel difficulties in Nigeria and delivery problems from Cameroon’s Limbe refinery. Local companies control 35 percent of petroleum distribution and marketing in Chad, followed by Libyan-owned Tamoil (25 percent), ExxonMobil and Total (20 percent each).

Top Sub-Saharan Africa proven natural gas reserve holders. (Source: Oil and Gas Journal)

According to OG J, Cameroon has 3.9 trillion cubic feet (Tcf) of proven natural gas reserves. The majority of the reserves are located in the Rio del Rey, Douala and Kribi-Campo basins. In 2006, Perenco signed a 25-year contract with SNH to develop the offshore Sanaga Sud natural gas fields. The Sanaga Sud fields are located in the Douala/Kribi-Campo basins. Cameroon will use natural gas produced from the fields to generate power at the Kribi plant. Both Perenco and SNH will invest $50 million in the project. Previously, in 2005, Syntroleum Corporation had studied the feasibility of developing gas-to-liquids (GTL) at Sanaga. However, it now appears that power generation project will preempt the GTL development. Currently, Cameroon utilizes natural gas to enhance oilfield performance and generate in-field electricity.

Chad has no proven natural gas reserves, and it neither produces natural gas nor consumes natural gas.

Chad/Cameroon electricity generation capacity, 1984-2004. (Source: EIA)

As of January 2004, Chad had 30 megawatts (MW) of installed electricity generating capacity, of which 100 percent was conventional thermal. In 2004, the country generated 0.09 billion kilowatthours (Bkwh) of electricity, while consuming 0.09 Bkwh. Generation and consumption of electricity in Chad have increased by 0.02 Bkwh, or 22 percent in the last 20 years. The small increase is due to a lack of investment in the electricity sector. Only a small portion (2 percent) of Chad’s population has access to electricity. The vast majority of Chadians rely on biomass fuels, such as wood and animal dung.

In 2004, Cameroon had installed electricity generating capacity of 900 MW, of which 95 percent was hydroelectric and five percent was conventional thermal. Cameroon generated 3.92 Bkwh of electricity in 2004, while consuming 3.65 Bkwh.

Sector organization

In 2001, US-based AES Corporation purchased a majority stake in Cameroon’s state-run, Société Nationale d’Electricité (SONEL). Since then, AES-SONEL has managed Cameroon’s power generation and distribution to around 500,000 people. Most of Cameroon’s population does not have access to electricity, while those who do are often subject to brownouts, which ultimately forces AES-SONEL to implement load-shedding and power cuts to maintain electricity supplies. During 2003-2009, AES-SONEL plans to invest $500 million to improve Cameroon’s electrical infrastructure. The completion of an 85-MW, oil-fired plant at Limbe, in August 2004, marked the first step in the electricity network improvements. AES-SONEL has additional plans to build hydroelectric plants, as well as Cameroon’s first natural gas-fired plant at Kribi, which will be supplied with natural gas from the Sanaga natural gas fields.

Generation and distribution of electricity in Chad are handled by the state-run Société Tchadienne D’eau et D’électricité (STEE).

Cameroon's electricity generation, by source, 1994-2004. (Source: EIA, International Energy Annual 2004)

Cameroon’s two main hydroelectric stations, Edea and Song-Loulou, are located on the Sananga River, while the smaller Lagdo station is located near Garoua. In the future, successful development of Cameroon’s hydroelectric potential could make the country a net electricity exporter. However, Cameroon’s heavy reliance on hydroelectric power leaves its electricity sector extremely vulnerable to droughts. Cameroon relies on approximately 30 aging diesel power stations as back-up facilities, the largest of which are located in Garoua (20 MW), Douala (15 MW), and Yaounde (11 MW).

Cameroon continues to study the Lom Pangar Dam project. Construction on the dam has yet to occur as environmental impact studies are currently ongoing. The World Bank has voiced concern over the Lom Pangar project, especially since a reservoir created by the dam would submerge part of the Chad-Cameroon pipeline. AES-SONEL and Électricité de France (EDF) have also conducted studies concerning a Chad-Cameroon interconnector project. Power would be transported from the Lagdo Hydroelectric plant to N’Djamena, Chad.

Conventional thermal capacity comprises all of Chad’s power supply. Four generators, which are fueled by oil imported from Nigeria and Cameroon, make up the country’s only major power station (22 MW). The plant is located in N’Djamena, where approximately nine percent of households have electricity. The high cost of importing petroleum to fuel power generation makes Chad’s electricity prices among the highest in the world. World Bank loans to develop the electricity sector have focused on sustainable energy ($5.3 million) and equipment refurbishment ($55 million).