Table of Contents and Snapshot Summary (PDF)

Chapter 2 - Construction, Commissioning & Production (PDF)

The Project continued its ramp up to full crude oil production levels this quarter despite the challenges of the annual rainy season.

- The Project’s average daily production of crude oil was pushed above 180,000 barrels per day and on some days exceeded 200,000 barrels.

- As a result, the Project exported nearly 60% more oil in the second quarter of 2004

Drillers have nearly completed their work in the Komé and Miandoum oilfields and at quarter’s end they were focused on the Bolobo field.

- The Project had drilled a total of 168 wells by the end of the quarter, about two-thirds of the planned total.

- A total of 145 of the 168 wells had been completed and were available for production.

Construction of the supporting infrastructure for the wells in the Bolobo oilfield has leaped far ahead of schedule and the first oil from the Bolobo oilfield should reach the export pipeline in the next quarter, the third of the Project’s original three fields to be brought online

Cameroon held festive Project inauguration ceremonies with a ceremonial valve turning at the coastal terminus of the export pipeline followed by speeches and traditional dancing at the Kribi town center. Five African heads of state attended the event. Chadian President Idriss Deby helped Cameroonian President Paul Biya unveil a commemorative plaque.

The Consortium signed a new Convention with the Government of Chad this quarter. This new agreement will cover future exploration and development opportunities.

- The Government of Chad negotiated increases in royalty payments on oil extracted from any new oilfield development outside of the fields covered under the 1988 convention.

- The new Convention has been approved by the President of Chad but requires formal ratification by the National Assembly, which is expected later in 2004.

Chapter 3 - Reportable EMP Situations (PDF)

Environmental monitors recorded a total of nine Environmental Management Plan non-compliance situations in the second quarter of 2004.

- Four of the nine situations were categorized as Level II non-compliances and the rest were classified as Level I situations, the lowest level of non-compliance.

- Two minor spills on land were also recorded. Spill clean up procedures were properly completed and no environmental damage was observed.

Chapter 4 - Safety (PDF)

The Project’s drilling group achieved a major safety record milestone this quarter, compiling a record of three years and 11.5 million work hours without a Lost Time Incident.

- Statistics show that the Project continues to maintain its generally very good workplace safety trends.

- Nevertheless, a Project-wide safe driving crackdown was launched this quarter in the belief that there is room for further significant improvement in driver safety performance.

Chapter 5 - Consultation & Communication (PDF)

The Project conducted over 160 public consultation sessions in the second quarter, reaching over 10,000 people. A number of the consultation sessions were conducted with residents who live in areas being considered for potential new oilfield development in southern Chad.

Chapter 6 - Compensation (PDF)

Total individual land use compensation paid by the Project in Chad and Cameroon has reached over 8.2 billion FCFA ($12.7 million) in cash and in-kind payments. Over 156 million FCFA ($240 thousand) was added to the total in the second quarter of 2004.

- In Chad, individual compensation distributed in the quarter totaled 133.8 million FCFA ($206 thousand).

- In Cameroon, individual compensation paid in the quarter was 22.6 million FCFA ($35 thousand).

The community compensation program in Chad has completed construction of 38 education, community facility, and water projects and construction has begun on an additional 31 projects. A total of 87 villages are eligible for community compensation in Chad.

In Cameroon, work on all but two categories of the community and regional compensation program has reached the 100% mark and the remaining two categories are only a few percentage points short of completion.

Both of the Project’s resettlement alternatives programs have progressed into their later phases.

- The Improved Agriculture Program has completed its initial community training of farmers and has moved into a phase where the farmers are receiving equipment and material grants to help them begin work on their own fields.

- A third group of students graduated from the Off Farm Training Program after receiving one to two years of training in non-agricultural trades of their choice, ranging from auto mechanics to catering.

Chapter 7 - EMP Monitoring & Management Program (PDF)

The program for monitoring and managing the ongoing implementation of the Project’s Environmental Management Plan focused on a diverse array of disciplines this quarter.

- An independent firm of experts completed a testing program, verifying that emissions from exhaust stacks for generators and boilers at Project facilities are within the standards specified in agreements with the World Bank.

- An illegal logging operation was discovered in Cameroon along the export pipeline during an inspection by Project environmental monitors. The operation was reported to the government of Cameroon for action and the Project implemented measures to help prevent access to the area.

- An emergency response drill, one of a series of such drills, helped prepare Project managers for action in the event of a major oil spill. Emergency operations centers in N'Djaména, Komé, and Douala were activated.

- Environmental baseline assessment studies continued in support of seismic testing for potential new oilfield development locations in southern Chad. A biologist is conducting field studies to build a database of animals and plants that might be affected by the work.

- The Project's dust control program has paved designated roadway sections that pass through oilfield area villages. The Double Bitumen Surface Treatment paving technique will help reduce road dust from Project traffic.

Waste management efforts this quarter have included a major effort to sort stored construction-phase waste and mine it for recyclables. A program to reduce a backlog of stored used motor oil has been injecting the used oil into the exported stream of crude oil as provided by the EMP.

Chapter 8 - Local Employment (PDF)

Overall employment levels held generally steady on the Project during the second quarter, falling by a fraction to just under 4,300 people.

- Employment in Cameroon rose slightly partly due to hiring for maintenance work on the pipeline right of way.

- Total employment in Chad fell by several hundred employees as the Project continued to demobilize its construction work force.

- Wages paid to Chadian and Cameroonian workers in the second quarter of 2004 totaled nearly 3.5 billion FCFA ($5.4 million).

A world-class oil industry technical training institute has now been established in Chad at the Komé central oilfield facility.

- The advance training facility includes laboratories and simulators for hydraulics and electrical systems, computer classrooms, lecture halls and classrooms, an extensive machine shop, and a technical reference library.

- The new institute was dedicated to the memory of the late Abderahman Dadi, a government official who led negotiations for Chad during the Project's formative years.

Chapter 9 - Local Business Development (PDF)

Long term contracts have been awarded to three local vendors who will be providing catering, vehicle parts, and road maintenance services to the Project in Chad.

- The Project spent 29.2 billion FCFA ($45 million) purchasing goods and services from Chadian and Cameroonian suppliers during the quarter.

- Project spending with Cameroonian businesses dropped by 11% in the second quarter to 8.5 billion FCFA ($13.1 million), continuing a declining trend that began in 2003 following the end of construction in Cameroon.

- In Chad, where construction work continues but is nearing completion, the Project's local business spending rose slightly, by about 4% compared to the previous quarter. Project spending with local businesses increased to 20.7 billion FCFA ($31.9 million).

Chapter 10 - Health (PDF)

Project clinics provided over 4,600 worker medical consultations during the second quarter. With the arrival of rainy season, the medical staff was focused on malaria prevention.

- Only two malaria cases were recorded during the quarter among the non-immune worker population (generally expatriates).

- There were no serious malaria cases requiring hospitalization among the semi-immune Project-worker population (generally local residents).

- The Fourth African Day Against Malaria was held this quarter. In Cameroon, the Project donated 600 anti-mosquito bed nets to three hospitals and an orphanage.

Chapter 11 - Context: Chad's Implementation of the Revenue Management Plan (PDF)

Officials for Chad's Revenue Management Plan report that construction has started on the first development project to be funded through Chadian oil revenues.

- The road paving project north of Massaguet, Chad, will help link N'Djaména, the capital city, with the town of Abeché, the country’s primary commercial center in the northeast.

- The Project has been depositing royalty payments from the sales of crude oil in escrow accounts in a London bank. The bank controlling the escrow accounts disbursed the first payments to Chad in July of 2004, as this report was going to press.

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