Table of Contents and Snapshot Summary (PDF)

Chapter 2 - Production & Construction (PDF)

Oil shipments reached a new milestone in 2006 with the 200th shipment of crude oil from the project’s marine terminal at Kribi, Cameroon. The milestone was achieved just three years after the first sale of oil in 2003. In order to sustain the flow of oil at the current rate, the project continues to add production wells and to improve existing oil well productivity.

- Project drilling crews added 89 new production wells in 2006, bringing the p roject inventory to 368 production wells. Thirty-one of the new wells are in the two new oilfields developed outside the original three fields area.

- A total of 200 well enhancement procedures were conducted to improve production from existing wells during 2006, almost double the number of enhancements performed during all of 2005.

- Crews also drilled 15 new water injection wells, raising the injection well inventory to 22 wells dedicated to disposal of “produced” water that must be removed from the crude oil before shipment.

Chapter 3 - Reportable EMP Situations (PDF)

Project environmental monitors recorded a total of 11 Environmental Management Plan non-compliance situations in the second half of 2006, eight in the third quarter and three in the fourth quarter. All of the non-compliances were categorized as Level I situations, the most minor level of non-compliance.

Five small spills occurred during this reporting period. The three-level ranking system for EMP non-compliance situations was designed as an early warning mechanism to detect issues and help correct non-compliant behaviors and practices well before they became serious enough to cause damage.

Chapter 4 - Safety (PDF)

In 2006, project workers continued a six year run of good safety performance records – bettering by wide margins the industry norms for key safety performance indicators.

- The project as a whole has a Lost Time Incident Rate of only 0.029 per 200,000 working hours, about eight times better than the U.S. petroleum industry average of 0.24 lost time incidents per 200,000 working hours.

- As 2006 ended, project workers had logged 171 million hours of work and their Recordable Incident Rate held steady at 0.43 incidents per 200,000 work hours – more than 1 1/2 times better than the U.S. petroleum industry average.

- The drilling group - the highest risk segment of the petroleum industry - has a perfect record of no lost time incidents in the six years since development began in Chad. Drilling industry trade organization statistics give the world’s drillers an average 0.58 lost time incidents per 200,000 working hours.

- COTCO, the project pipeline company in Cameroon, celebrated a landmark 200 weeks without a Lost Time Incident.

Chapter 5 - Consultation & Communication (PDF)

During the second half of 2006, the project held almost 700 public consultation sessions, bringing the annual total to more than 1,400. More than 25,000 people attended project consultation sessions during 2006.

One major consultation event at year’s end was a workshop meeting with traditional leaders in the Oilfield Development Area. For more information on this event see the section Update: Land Use in the Oilfield Development Area.

Chapter 6 - Compensation (PDF)

Total individual land use compensation paid by the project over the last four quarters totaled over 776 million FCFA ($1.1 million) in cash and inkind payments. A total of more than 10.7 billion FCFA ($16.5 million) in individual compensation has been disbursed since the project began.

Chapter 7 - Update: Land Use in the Oilfield Development Area (PDF)

For most of 2006, and now moving forward into 2007, the project has been taking action to address a challenging land use situation in the oilfields area. The situation involves the amount of land needed to develop Chad’s oil while at the same time ensuring that oilfield area villages have enough land for traditional farming practices. As reported in previous Project Updates:

- Intensive efforts to address the land use situation began early in 2006 as crews began clearing a backlog of land reclamation obligations so that temporarily occupied land could be returned to villages for agriculture.

- At mid-year, an independent evaluation study of the project’s resettlement and compensation program gathered field data and the authors made additional mitigation suggestions in the course of their work. The project and the World Bank jointly commissioned the study.

- By year end, full implementation of a detailed action plan was well under way. The plan addresses all of the near- and mid-term recommendations in the study. All of the action plan work will be completed by the end of 2007.

Chapter 8 - EMP Monitoring & Management Program (PDF)

A multi-million dollar flare reduction initiative has been launched at Chad’s oilfield facilities as the project continues its air monitoring procedures and works to further reduce dust generated by traffic on oilfield area roads. In Cameroon, an erosion control and native plant revegetation program has proven a success and a contractor has recycled tons of project vehicle batteries.

The project launched a $25 million flare reduction program in 2006, a response to unexpectedly large volumes of gas from the new Moundouli oilfield. In all the other upper cretaceous oilfields developed so far in Chad the levels of associated gas have been low, although some gas is always found in the crude oil emulsion when it is first drawn from the earth.

Chapter 9 - Local Employment (PDF)

Overall employment levels for the project remained stable in the second half of 2006. Chadians and Cameroonians combined held 85% of the project’s direct employment jobs.

- Wage payments to Chadian workers for the third quarter of 2006, totaled an estimated 3.0 billion FCFA ($4.6 million). For the fourth quarter, wages fell to an estimated 2.9 billion FCFA ($4.4 million).

- Wage payments to Cameroonian workers for the third quarter of 2006, totaled an estimated 1.3 billion FCFA ($1.9 million). For the fourth quarter, wages rose to an estimated 1.4 billion FCFA ($2.3 million). Wage estimates have been based on the latest available reports from project contractors.

Chapter 10 - Local Business Development (PDF)

Project purchases of goods and services from local suppliers totaled nearly 123 billion FCFA ($189.3 million) for the twelve months ending with the fourth quarter of 2006. That spending level represents a 9% increase over the spending for the 2005 calendar year.

- In Chad, spending in the twelve month period totaled 93.0 billion FCFA ($143.1 million), bringing project spending to date in Chad to 527.2 billion FCFA ($811.1 million).

- In Cameroon, spending in the twelve month period totaled 30.0 billion FCFA ($46.2 million), bringing project spending to date in Cameroon to 375.2 billion FCFA ($577.2 million).

Since construction began the project has purchased over 902 billion FCFA (nearly $1.4 billion) in goods and services from Chadian and Cameroonian businesses.

Chapter 11 - Worker Health (PDF)

The project has achieved another breakthrough in the 2006 results of its malaria prevention program, cutting its already low malaria rate for nonimmune workers by another 40% compared to 2005.

- In Cameroon, the project has achieved another full year with no recordable malaria cases – now at more than four years without a single case.

- In Chad, 11 recordable worker malaria cases were recorded during 2006, all of them in the non-immune population, half the number in 2005.

Chapter 12 - Community Health (PDF)

Two community clinics have been repaired and upgraded in southern Chad, ready to be opened and accept patients. The project has also provided its traditional support for Chad’s annual polio vaccination program.

Chapter 13 - Update: Chad’s Oil Revenue (PDF)

Chad’s revenue from the oil project reached and then surpassed a major milestone in 2006. Chad attained its first $1 billion in project revenue during the year and by the time 2006 closed, the project had paid Chad nearly $1.3 billion total revenue since the project began.

As described in the previous Project Update Report, a major leap in Chad’s revenue has been driven by a new revenue stream that opened in the last year – the first Consortium payments of a 60% corporate income tax. Unusually high worldwide oil prices have also greatly enhanced Chad’s royalty income.

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