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Analysis: Chad unrest may be over oil

disclaimer: image is for illustration purposes only
by Carmen Gentile
Miami (UPI) Feb 7, 2007
Chad's rebels are upset with how the country handles revenue from its oil industry, experts say.

The rebellion aimed at toppling Chadian President Idriss Deby that brought fighting to the streets of the capital, N'Djamena, in recent days is in part a condemnation of how his administration uses the central African country's modest revenue from oil production.

Chad produced far less oil than neighboring Nigeria, about 200,000 barrels per day compared with Nigeria's 2 million bpd estimated output. But the relatively meager income from oil profits has not trickled down to impoverished Chadians, the rebels contest.

But unlike Nigeria's militants, Chadian rebels do not consider misappropriated oil profits the focal point of their fight, noted Africa oil expert John Ghazvinian, author of "Untapped: The Scramble for Africa's Oil."

"They'll (Chadian rebels) probably say something like 'this is corrupt government that doesn't spend its revenue on its people,'" Ghazvinian told United Press International Wednesday. "But it's a very different situation than the Niger Delta," he added, noting ethnic and political tensions foment the current violence in Chad.

While Nigeria's militants focus most of their assaults on oil platforms and pipelines in an effort to throw the country's production offline, Chadian rebels have not threatened oil production while trying to oust Deby, noted Ghazvinian.

The Doba oil field, Chad's most productive, is far enough from the capital to remain relatively unaffected by the violence that's left dozens dead and an estimated 1,000 wounded in and around the capital. Chad's oil industry, however, is still in its infancy, and protracted rebellion could eventually affect production, said other experts.

Chad began extracting its estimated 2 billion barrels in reserves following the opening up of the country to foreign oil investors in 2000. Oil production did not come online until 2003. That same year, a 650-mile pipeline from southern Chad to the Atlantic coast nation of Cameroon was completed with the help of $365 million in World Bank loans to complete the $3.5 billion project.

In 2004 Chad began exporting petroleum. According to 2005 estimates, Chad produces some 225,000 bpd and sets aside a tiny fraction of that for domestic use. The World Bank loan was contingent on an agreement that Chad set aside a portion of its oil revenue for health and education.

But in late 2005, Deby upset international lenders by deciding to rewrite the World Bank agreement so its oil money could be spent however the government deemed necessary. The decision followed the emergence of rebel groups in neighboring Sudan that began launching attacks on eastern Chad. Most analysts speculate the government intended to divert its oil for social spending revenue to bolster up its defenses against the rebels.

The World Bank then suspended some $124 million in loans slated for Chad. By April 2006, with oil prices reaching $75 a barrel and Chad threatening to shut off its oil valves, World Bank President Paul Wolfowitz lifted the suspension and wrote a new agreement with the Chadian government.

Institute for Policy Studies Fellow Daphne Wysham said Chad's threats to cut off production combined with near-record oil prices prompted the World Bank to allow Chad to break its initial agreement, leaving the country's poor without the social programs they were promised.

"Because the price of oil is so high, the United States and other nations want to see it flow at any cost," Wysham told UPI.

"This is what you get when you do business with a corrupt country, and Chad is one of the most corrupt countries in the world," she said.

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