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Chad Cameroon
Chad Cameroon
Chad Cameroon
083868
November 17, 2014
Executive Summary
A consortium of oil companies including Conoco, Chevron, Exxon and Royal Dutch/
Shell has discovered oil in Chad, Africa in the early 1970s. The consortium then decided to mine
the oil with the help of the World Bank and International Finance Corporation as their main
funder, analyst and consultant.
There is now a decision to be made by the World Banks and the International Finance
Corporations Boards of Directors on whether they are going to approve funding for the $4
Billion Chad-Cameroon Petroleum Development and Pipeline Project. There are both supporters
and opposes of the project due to the effect it will have with the natural environment and political
environment of the project.
the Board of Directors of World Bank and International Finance Corporation in order to give the
answer of whether they will go ahead with the project, postpone or cancel.
Causes of the Problem
We would now go into the detail of each of the stated problems above.
How are the profitability and the feasibility of the Project?
The project would consist of known technologies which includes an Export System
which is a 670 mile pipeline buried one meter underground.. It would contain a monitoring
system to detect leaks. It would employ as many as 7000 people during construction and as much
as 500-800 once operations began.
The proposed structure of financing is $2.3 Billion of equity of which $2.2 Billion would
come from private sectors. The base case would produce 883 million barrels with an average
price of $15 per barrel and cost of $5.2 per barrel.
As can be seen this project is highly profitable due to the huge contribution margin and
highly feasible due to the available of the man power and capital once approved by the World
Bank and International Finance Corporation.
My recommendation is to delay the project. With the current political situation in the
countries, the project would tend to be unstable and unsustainable due to lots of conflict and risks
which are uncontrollable.