Project Report on Export Business

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Project Report on Export Business Powered By Docstoc
					Chad Export Project Report #9
          4th Quarter 2002
        Annual Summary 2002




    This report has been prepared by Esso Exploration and
    Production Chad Inc., in its capacity as Operator of the
    Consortium and as Project Management Company on behalf
    of the Tchad Oil Transportation Company S.A. (TOTCO)
    and the Cameroon Oil Transportation Company S.A.
    (COTCO).
                                     Preface

T   his ninth in the series of Quarterly Reports for the Chad Export Project (also
    referred to as the Chad/Cameroon Development Project) covers the period from
October 2002 through December 2002. The Annual Project Summary for 2002 has been
combined with this report in the form of topic-by-topic summaries and data tables.
This report reflects the work of the Project operating company and its contractors with a
particular focus on compliance with the Environmental Management Plan. Several
entities share responsibility for implementing the Project.
• Oilfield development in Chad is conducted by Esso Exploration and Production
   Chad Inc. (EEPCI) on behalf of the Consortium (Esso, Petronas, ChevronTexaco).
• Pipeline activities in Chad are conducted by the Tchad Oil Transportation Company
   S.A. (TOTCO).
• Pipeline activities in Cameroon are conducted by the Cameroon Oil Transportation
   Company S.A. (COTCO).
• During construction, EEPCI is providing project management services to TOTCO
   and COTCO.
Quarterly Reports are submitted through, and subject to verification by, the World Bank
and Lender Group as a reporting requirement of the Project’s partnership with the Bank
and the two host countries. Annual Project Summaries are also published early in each
year.
This report also represents a commitment to transparency by Esso and its co-venture
partners. By publishing this information, the Project wishes to make it possible for the
World Bank and Lender Group, the citizens of the host countries, interested non-
governmental organizations (NGOs), and others to stay well informed about the Project
as it unfolds.
The Quarterly and Annual Reports are posted on the Project’s website
(www.essochad.com). A limited quantity of printed reports is also distributed to
stakeholders in fulfillment of reporting requirements and to make information available
to the citizens of Chad and Cameroon where very few people have access to the
Internet. This Quarterly Report is also available in French.
Please note that October 2000 has been designated as the official start date of the Project
for the purposes of data compilation. For consistency, monetary unit conversions have
been based on a rate of 650 FCFA to one U.S. dollar.
                        Table of Contents
Snapshot Summary of the Quarter              1

Construction Progress                        7

Reportable EMP Situations                   23

Safety                                      33

Consultation & Communication                39

Compensation                                49

EMP Monitoring & Management Program         55

Local Employment                            63

Local Business Development                  69

Training                                    77

Archaeology & Cultural Resources            81

Worker Health                               83

Community Health                            89

Waste Management                            93

Water Quality Monitoring                    97

Environmental Foundation                    101

Transition to Oil Production Phase          103
                                                                                  Section



                                                                                    1
Snapshot Summary of the Quarter
•   The Project anticipates that it will begin producing oil from one of the three oilfields
    in southern Chad in mid-2003. At the close of 2002, the Project - including
    engineering, procurement, and construction - was well over 75% complete.
    - Almost all of the export pipeline had been welded and buried in its trench.
    -   Thirty-eight production oil wells have been drilled and tests of these first wells
        have been meeting expectations.
    -   Refurbishment of the Floating Storage and Offloading vessel and fabrication of its
        mooring was nearing completion in Asia.
    -   Facilities construction in the Oilfield Development Area accelerated in December
        after resolution of a multi-week job action by truckers, which made it possible to
        clear a backlog of freight essential to the construction effort.
•   Field monitors recorded 25 Project-reportable Environmental Management Plan non-
    compliance situations this quarter, the second lowest quarterly level in two years.
    -   One minor Project reportable spill took place on land this quarter. There were no
        spills into water or wetland areas.
    -   No critical (Level III) non-compliance situations have been recorded by the Project
        to date.
•   No Project-recordable lost time incidents occurred in the fourth quarter of 2002 and
    the overall worker safety record at Project work sites continues to be very good.
    -   The traffic accident injury rate for the Project is 59 per 100 million miles driven,
        compared to the North American rate of 116 per 100 million miles driven.
    -   Workers for facilities construction contractor TCC have topped the 21 million hour
        mark without a lost time incident.
    -   The oil well drilling operation, including contractors Pride Forasol and
        Schlumberger, was nearing five million worker hours without a lost time incident.
•   Public consultation increased in the fourth quarter to 680 sessions, reaching more than
    23,000 people.




                                               1
                                                                        Snapshot Summary



    -   Support for pipeline construction activities in southern Chad contributed to the
        rise in consultation levels.
    -   The Project consulted with fishermen in the Kribi area in preparation for the start
        of offshore construction in the first quarter of 2003.
    -   Consultation meetings on the Project’s Area Specific Oil Spill Response Plans
        began in November in Chad. Similar meetings will occur in Cameroon in January
        2003.
•   The Project launched an improved dust control program in Chad.
    - A fleet of 28 road watering trucks was assigned to dust control duty in southern
       Chad along the Project-upgraded road and in the Oilfield Development Area.
    -   Several sections of road in the Oilfield Development Area will be treated with
        DBST, a type of paving material. Other dust control measures will also be
        evaluated.
•   The Project paid nearly 519 million FCFA ($798 thousand) in cash and in-kind
    compensation to individual land users in the fourth quarter of 2002.
    -   In Chad, individual compensation distributed in the fourth quarter totaled 215
        million FCFA ($330 thousand).
    -   In Cameroon, individual compensation paid in the fourth quarter was nearly 304
        million FCFA ($467 thousand).
    -   Since the compensation program began, approximately 6.75 billion FCFA ($10.4
        million) in cash and in-kind payments has been distributed to individual land
        users.
•   The Project’s regional and community compensation programs made good progress
    in the fourth quarter.
    -   In Cameroon, implementation of the program began after a nearly year-long
        consultation effort to help communities choose their micro-development projects.
    -   In Chad, consultations are well along in all of the communities eligible for the
        program and nearly all of them have submitted proposals for projects.
•   In December, a cooking fire spread out of control and destroyed much of the Komé
    Atan settlement, located across the road from the Komé Base Camp.
    -   Project fire fighters responded to the fire and rendered assistance. The fire caused
        no serious injuries, although one burn victim was treated at a Project camp clinic.
    -   The Project supported the government’s relief efforts through donations of wood
        and clothing, and by laying out new streets, among other measures.
    -   The fire struck as the Project was completing a set of action steps to improve
        certain conditions in the settlement.



                                              2
                                                                         Snapshot Summary



•   For the first time since construction began, the size of the Project’s direct workforce
    has started to fall.
    -   The Project’s overall peak workforce was reached in November with a total of
        13,156 workers but then fell back to the previous quarter’s level in December.
    -   Chadians and Cameroonians make up about three-fourths of the Project’s
        workforce, and about 60% of them hold skilled or semi-skilled jobs.
•   Wages paid to Chadian and Cameroonian workers in the fourth quarter of 2002
    totaled almost 7.8 billion FCFA ($12 million).
    - Wage payments to Chadian workers approached 4.1 billion FCFA ($6.3 million).
    - Wage payments to Cameroonian workers were 3.7 billion FCFA ($5.7 million).
•   Figures show that Project construction has driven the pace of economic growth in
    Chad sharply upward (as measured by Gross Domestic Product).
    -   From 1999 to 2002, annual Gross Domestic Product growth has gone from only 1%
        to almost 11%.
    -   This rise tracks closely with the Project’s purchasing of goods and services in
        Chad, which has gone from $10 million in 2000 to $173 million over the same time
        period.
    -   Since construction began, the Project has purchased over 151 billion FCFA ($232
        million) of local goods and services from Chadian businesses.
•   The Project spent 59 billion FCFA ($90 million) buying goods and services from
    Chadian and Cameroonian suppliers during the fourth quarter.
•   Training of Chadian and Cameroonian workers during the fourth quarter totaled 1800
    sessions, with class attendance of over 12,000.
•   Archaeological investigations in Chad and Cameroon began to shift from the field to
    the laboratory this quarter as excavation at Project work sites neared completion.
    -   The Cameroon team moved its collected samples into a new laboratory facility in
        Douala.
    -   In Chad, the Project signed a contract with the University of N’Djaména to create a
        new archaeology laboratory. This building is under construction.
•   Project clinics provided 23,410 worker medical consultations during the fourth
    quarter of 2002.
    -   The control of malaria continued as the major focus of the Project’s worker health
        program.
    -   A major dining hall upgrade was completed at the Project’s Komé Base Camp,
        adding a new restaurant to enhance capacity and food safety.



                                              3
                                                                         Snapshot Summary



    -   A new larger Project worker clinic was opened at the central oilfield facility to
        serve the construction workforce.
•   The initial phase of the Roll Back Malaria program in Chad has been completed. In
    2002, the two NGOs contracted by the Project to implement much of the program
    distributed 37,000 bed nets in 141 Project-area villages, and provided malaria
    prevention education to 122,000 people.
•   A year long, multi-village STDs/HIV/AIDS prevention and education program was
    completed in Cameroon.
•   The Project reduced its hazardous waste backlog by approximately half this quarter,
    primarily due to the success of a recycling program for used motor oil in Cameroon.
    Over 40% of the Project’s non-hazardous waste was recycled to villages or sent to
    approved recycling facilities.
    -   The permanent waste storage facilities at the two Cameroon pump stations and
        the Pressure Reducing Station were completed.
    -   Construction began on the permanent Komé waste management facility, which
        will include hazardous and non-hazardous solid waste landfills, a hazardous
        waste-capable incinerator, two domestic waste incinerators, and a waste storage
        building.
    -   The hazardous solid waste landfill at Pump Station 3 near Bélabo has been
        excavated and the liner installed. The landfill will go into operation in 2003.
•   Data from two years of Project water monitoring shows that the water resources used
    by the local population in the immediate vicinities of Project work sites and water
    withdrawal points have not been adversely affected.
•   The Management Board of the Foundation for Environment and Development in
    Cameroon (FEDEC) met in December. After reviewing progress to date, the Board
    adopted a future action plan and strategic vision.
•   As construction moved towards the first oil production milestone in mid-2003, work
    continued to build the Project’s operations phase organization.
    -   A total of 177 Chadians and Cameroonians have been hired so far as permanent
        Project technical, managerial and professional staff.
    -   Over 70 of the nearly 100 new technicians are working in Canada, the United
        States and other countries to gain job experience.
    -   A training program was been developed to prepare the expatriate staff who will
        mobilize to Chad and Cameroon beginning in March 2003.




                                               4
                                                                                                                                                        DOBA          OIL FIELD DEVELOPMENT AREA
                                                                                                                                                                      (INCLUDES PUMP STATION #1)
                                                                                                                                                        KOMÉ

                                                                                                   MAINTENANCE AREA #1                                                CHAD
    N
                                                                                                                        BAIBOKOUM
                                                                                                                 TOUBORO
W           E
                                                                                 MAINTENANCE AREA #2
                                                                                                               Dompla
    S                                        NIGERIA                                          NGAOUNDÉRÉ
        Location Map                                                                                                        PUMP STATION #2


                                                                                                MEIGANGA
                                                                                  NGAOUNDAL




                                                           MAINTENANCE AREA #3

                                                                                                                                              CENTRAL AFRICAN REPUBLIC
                                         CAMEROON                                               DENG
                                                                                                DENG
                                                                                    BELABO
                                                                   NANGA EBOKO




                                                    BATCHENGA                                     PUMP STATION #3
                         DOUALA

                MAINTENANCE AREA #4
                                                                  YAOUNDÉ


                                                           NGOUMOU
            GULF OF                                 LOLODORF
            GUINEA
                           KRIBI
                                          BIPINDI                                                                                                                 CONGO
                                          PRESSURE REDUCTION STATION
                                      MARINE TERMINAL
                                                                                                                                                        0                100        200 Kilometers


LEGEND
        Oil Field Development Area              Major Roads                                                                                         OVERVIEW OF PIPELINE
                                                (In Study Area)
        Pipeline
        International Boundaries
                                                Railroad                         Chad Export Project                                              TRANSPORTATION SYSTEM
                                                                                                                                    D
        Maintenance Area Boundaries             Marine Terminal                                                                           M
                                                (FSO)                                                                                         DAMES & MOORE
                                                                                                                                    GRO   P   D   OOR   RO P CO   P
                                                      one
                                                   Log
    N                                                                   BÉBÉDJIA

W           E
                                                                                                           SAVANNA
                                                                                                                                                                                                     DOBA

    S

         Location Map




                                                                                                                                                                                       KOMÉ FIELD
                                                                                                                                                                                BÉRO
                                                                             MIANDOUM                                                        KAGROVE
                                             DANGDE


                                                                                                                                                             BANGA
                                                                                               KAYRA
                                          MIANDOUM FIELD
                                                                                                                                                            TEM
                                                                                                                                                         SYS
                                                                                                                           BELA




                                                                                                                                                                                              LD
                                                                                                                                                   ING
                                                                                 DANGOUM                                                        HER




                                                                                                                                                                                            IE




                                                                                                                                                                                                   Pen
                                                                                                                                             GAT




                                                                                                                                                                                          RF
                                                                                                                                                                                        AI




                                                                                                                                                                                                      dé
                                                                                                           BOLOBO FIELD
                                                            GALABA
                                                                       M-1              GATHERING                                              BEGADA                              OPERATIONS
                             MEKAPTI                                                              SYSTEM
                                                                                                                     B-1                                                             CENTER
                                  MANBOE
                                                               BENDO
                                                                                      a
                                                                                    Ny




                                                                                                                    NE
                                                                                                                  LI



                                                                                                                                  KOMÉ
                                                                                                                PE
                                                                                                              PI




                                                                                                                                                lé
     0          2        4    6 Kilometers                                                                                                   Lou                     SAVANNA
                                                                                                               BOLOBO

    LEGEND
                                                                                                                                                              OVERVIEW OF THE
          Komé Field                      Villages / Towns                                                                                                 OIL FIELD PROJECT AREA
          Miandoum Field            M-1   Gathering Stations
                                                                                   Chad Export Project                                                           (from Chad EA)
                                                                                                                                         D
                                                                                                                                               M
          Bolobo Field                    Rivers                                                                                                   DAMES & MOORE
                                                                                                                                         GRO   P     D      OOR   RO P CO   P
                                                                       Section



                                                                         2
           Construction Progress

           T    he Project anticipates it will begin producing oil from one of the three
                oilfields in mid-2003, thanks to good progress made this quarter in
           several key areas of construction. The entire Project should be completed in
           early 2004, clearing the way to ramp crude oil production up from about
           50,000 barrels per day in mid-2003 to the forecast peak rate of 225,000
           barrels per day. At the close of 2002, the Project - including engineering,
           procurement, and construction - was well over 75% complete.
           • All but a few small sections of the export pipeline were welded together
              and buried in its trench, in preparation for transporting crude oil from
              the Chadian oilfields to the marine terminal off the coast of Cameroon.
           • Oil well drilling has been proceeding at a brisk pace - 38 production
              wells have now been drilled. Tests of the first wells have been meeting
              expectations.
           • Refurbishment of the Floating Storage and Offloading vessel and
              fabrication of its mooring was nearing completion in Asia. These
              components of the marine terminal will be moved to their permanent
              location off the coast of Cameroon in the second quarter of 2003.
           • A multi-week job action by truckers was resolved and the resulting
              backlog of freight needed by the Project was cleared. The facilities
              construction contractor was then able to accelerate the rate of
              construction at the central oilfield facility and in the Miandoum oil field.
Pipeline   At times during the fourth quarter of 2002, pipeline construction crews
           were able to weld and bury as much as six or seven kilometers of pipe per
           day.
           • In Chad, all 180 kilometers of the pipeline have been welded and buried.
              The relatively flat terrain contributed to the very high rate of pipeline
              construction progress in the fourth quarter in Chad.




                                        7
                                                            Construction Progress



• In Cameroon, nearly all 890 kilometers of the pipeline had been welded
   and buried by the end of the year. Only 12 kilometers remained to be
   installed.
Early in the first quarter of 2003, pipeline construction crews will connect
the Chadian and Cameroonian portions of the pipeline by completing the
crossing at the M’béré River. The crossing is within sight of the new
international road bridge that the Project completed early in 2002.
All 48 of the main pipeline valves, called block valves, have been welded
into place along the pipeline. The block valves make it possible to shut
down sections of the pipeline for maintenance or in the event of an
emergency.
Roughly 60% of the pipeline has been hydrotested by filling the pipe with
water and subjecting it to high pressure to check for leaks.
To date, about 40% of the pipeline easement has been reclaimed. The
remaining 60% will be reclaimed in the first half of 2003. (For more
information on reclamation and the regrowth of vegetation on the right of
way, please see EMP Monitoring & Management.)




In this view from the air, special river crossing crews were preparing to lay the
pipeline across the M’béré River, a step that will connect the Chadian and
Cameroonian portions of the pipeline. The new international road bridge,
completed by the Project in early 2002, is visible in the background.




                               8
                                                                                Construction Progress




This rugged terrain in northern Cameroon has acquired the nickname “The W,” for its jagged up and
down profile. Pipeline construction in this section, about an hour northeast of Dompta, was very slow
as might be expected given the difficult terrain, but was nearly finished by the end of the fourth quarter.


                                                   9
                                                                                Construction Progress




The flat terrain in southern Chad (left) allowed pipeline construction work to proceed very quickly, in
contrast to the steep slopes of “The W.” Work crews were able to complete as much as four kilometers
of pipeline a day in such flat sections of the pipeline route. At times, three or four welders were working
simultaneously on the firing line (upper right) to set the pace and stay out ahead of the fast moving
“lowering in” team (lower right).




                                                  10
11
     Rigorous quality control measures ensure that the pipe will not leak. A round metal disk is launched through the pipe to
     check for dents, which would be detected if any part of the disk arrives bent out of shape, a process called gauging (upper
     left). In addition, the thickness of the corrosion prevention coating on the outside of the pipe is checked (lower left), and an
     electrostatic detector helps to check for any pinholes in the coating (right). Finally, after all these checks have been
     completed, the pipe is filled with water, put under pressure well above normal operating levels, and observed for a period
     of time to make sure there are no leaks.
                                                                                                                                        Construction Progress
Construction Progress




                                                                                                                                                      12
                        Three pump stations, like this one at Dompta, Cameroon, will move the crude oil through the pipeline. This particular
                        station, Pump Station 2, is crucial to the Project’s mid-2003 initial oil production goal. By the end of the fourth quarter
                        the station was about 75% complete.
                                                                                  Construction Progress



        Drilling    By the end of the year, crews on the oil well rigs had drilled a total of 38
                    production wells. Current plans call for drilling about 265 wells to fully
                    develop the three oilfields. Additional wells have been drilled to explore
                    the limits of the oilfields.
                    Injection wells have also been drilled so that water extracted during the
                    treatment of the crude oil can be pumped back into the deep underground
                    reservoir, and to dispose of fluids produced during well clean-up and
                    testing.




In some cases, well clean-up and testing fluids cannot be reinjected. Instead, the well testing crew
directs the fluids to a “flare” device that has been specially designed to burn the fluids right at the well
location, disposing of them in a safe and environmentally responsible manner. The worker behind the
barrier (inset) is adjusting the air mixture to the flaring nozzles. This helps ensure the flame burns
cleanly, completely combusting the crude oil and natural gas. Clear white sheets of paper set out
around the well during the test showed no sign of oil droplets in the area of this test. Well tests like this
one generally last for only a few days.




                                                     13
Construction Progress




                                                                                                                                                      14
                        The well test yielded good results and was a very important milestone for the drilling program. The well was drilled
                        much deeper into the earth than most of the Project's wells, in hopes of finding additional reserves of clean-burning
                        natural gas to fuel the electricity generating turbines that will power the oil production operations. Although natural gas
                        is not present in commercial quantities in the area, this well test showed that enough gas can be produced to operate at
                        least one of the turbines.
                                                                                Construction Progress




Another oil well evaluation procedure involves cutting cylinders out of the layers of oil-bearing sand
and rock as the drill bit grinds down into the earth. The resulting cylinders are called cores (inset).
Geologists carefully study the cores to gain a deeper understanding of the crude oil-baring rock
formations that lie deep underground.




Once again this quarter, drilling crews made major improvements in reducing the time to move a rig to
a new location after work has been finished at a well site. One of the large drilling rigs was moved in
25 hours, beating the third quarter record by 13 hours. A smaller rig, like the one shown here, was
moved in ten hours, two hours better than the target of 12 hours.



                                                   15
                                                                             Construction Progress



 Oilfield Area     Labor disputes involving oilfield construction workers and freight haulers
     Facilities    were resolved during the fourth quarter and the pace of construction
                   surged back to full speed during December. The rebound in deliveries of
                   supplies and equipment helped the construction crews make significant
                   progress in building every component of the oilfield facilities.
                   • The two primary crude oil storage tanks were successfully hydrotested.
                       No leaks were found.
                   • Half of the 16,000 pipe “spools” needed to interconnect all the elements
                       of the central oilfield facility had been installed by the end of the year.
                   • Cables for the 66 kilovolt oilfield area electrical power lines are now
                       being installed on their poles, with 4.5 kilometers of wire being fastened
                       in place by the end of 2002.
                   • Finishing work began on the control room where technicians will
                       monitor the oilfield systems, the crude oil treatment plant, and the
                       export pipeline system. Installation of the control system equipment will
                       begin early in the first quarter of 2003.




This view from the top of one of two main crude oil storage tanks shows the current state of progress
in constructing the central oilfield facility.




                                                 16
                                                                                    Construction Progress




Welders have made important progress installing pipe “spools” to interconnect the various components
of the central oilfield facility, a vital step towards achieving an initial level of oil production in mid-2003.




This work crew puts finishing touches on the control room that will become the Project’s technical
nerve center. When the computerized control equipment has been installed, and hundreds of control
circuits have been connected, technicians and engineers will be able to monitor the oilfield, the central
oilfield facility, and the entire length of the crude oil export pipeline. Construction of another fully
functional pipeline control center is underway at Pump Station 2 in northern Cameroon.




                                                    17
                                                                         Construction Progress



Logistics, Roads   Well over 90% of the material and equipment required to construct the
& Storage Yards    Project’s oilfield area facilities has now been transported to Komé by truck,
                   rail, air, and ship.
                   In some weeks of the fourth quarter, as many as six ships delivering Project
                   freight arrived at the port at Douala, Cameroon. Freight destined for the
                   oilfield area was moved from the ships to the north of Cameroon by rail
                   and then transported by road to southern Chad by hundreds of locally-
                   contracted truckers. Freight bound for Project work sites in Cameroon was
                   moved by a combination of rail and truck, depending on its destination.
                   Freight Movement
                   By the time construction has been completed, approximately 350,000 metric
                   tons of material and equipment will have been transported, the equivalent
                   of moving the entire Empire State Building, or 35 Eiffel Towers, or 14
                   Statues of Liberty.
                   3 Logistics Data
                                           4th Qtr     Weekly
                                            2002       Average
                       Truck Loads            1,851       154.3
                       Railcar Loads            972        81.0
                       Ship Loads                56         4.7
                       Air Cargo Flights        121        10.1


       Offshore    By the end of the quarter, the work on the Floating Storage and Offloading
Marine Terminal    vessel was well over 90% completed at a shipyard in Singapore. In addition,
                   fabrication of the Single Point Mooring structure was nearly finished in
                   Malaysia. Construction work in Asia has advanced to the point that some
                   operations have now started to shift to Kribi, Cameroon, commencing with
                   the construction of an anchor block to support the marine pipeline laying
                   operation.
                   • The Floating Storage and Offloading vessel has been scheduled to sail
                      out of the shipyard in Singapore in April 2003, bound for Cameroon.
                   • The Single Point Mooring unit will be loaded onto a barge in Malaysia
                      and shipped to Cameroon in February 2003.
                   • Installation of the 12 kilometer undersea pipeline will begin in early
                      2003.




                                            18
                                                          Construction Progress




This specially designed excavator will help construct a trench in the near shore
area for the undersea pipeline leading from the shore near Kribi to the Floating
Storage and Offloading vessel. The excavator underwent sea trials in France in
December before being put on a ship for transport to Cameroon.




The Floating Storage and Offloading vessel has come out of its second dry dock
session and work crews have started finishing cabin interiors and conducting the
inspections required before it can be commissioned.




                           19
                                                                          Construction Progress




                  Annual Summary: Construction Progress
                  In addition to the events described above for the fourth quarter, the
                  following key developments took place in the first three quarters of 2002.

  First Quarter   • Production oil well drilling commenced with three of the five drilling
          2002       and completion rigs in operation.
                  • Most concrete foundations were poured for the central oilfield facility.
                  • About one-fifth of the 1,070 kilometers of pipeline had been welded and
                     buried in its trench.
                  • Three factories in France and Germany completed their pipe
                     manufacturing work.
                  • Vegetation was already starting to grow back on the reclaimed pipeline
                     right of way near Kribi, where pipeline construction began in November
                     2001.
                  • After a year of construction, a long-awaited new permanent bridge was
                     pushed into place across the M’béré River. The concrete bridge
                     completed an all-weather route between Chad and Cameroon, reducing
                     by 200 kilometers the overall distance by road from Moundou (2nd
                     largest city in Chad) to a railhead at Ngaoundal, Cameroon.
                  • Work began to refit the tanker that will serve as the Project’s Floating
                     Storage and Offloading vessel.

Second Quarter    • All five of the Project’s oil well rigs were at work in the oilfields in
         2002        southern Chad.
                  • Construction crews had welded together and buried in the ground more
                     than 45% of the export pipeline.
                  • Steel erection, including the fabrication of crude oil storage tanks,
                     started at the central oilfield facility in Chad.
                  • Work was nearly completed on the road upgrade that allows freight to
                     be transported from a railhead in Cameroon to the oilfield area in
                     southern Chad. The new M’béré River Bridge was opened for public
                     use.




                                             20
                                                                       Construction Progress



Third Quarter   • Pipeline construction began in Chad, working south from Komé
        2002       towards the point where the route crosses the M’béré River at the border
                   with Cameroon.
                • Pipeline construction workers had welded together and buried about
                   two-thirds of the pipe, a total of 700 out of 1,070 kilometers.
                • The last of the 87,000 lengths of pipe needed to construct the pipeline
                   were delivered to storage yards along the pipeline route.
                • Crews on the oil well rigs more than doubled the number of drilled
                   wells, reaching a total of 26 by the end of the quarter. Significant
                   improvements were made in the time required to move a rig from one
                   well site to another.
                • Work on the Floating Storage and Offloading vessel and its Single Point
                   Mooring structure moved well past the 60% complete point.




                                         21
     Construction Progress




22
                                                                          Section



                                                                            3
              Reportable EMP Situations

              C     ontractor and Project field monitors recorded a total of 25 Project-
                    reportable Environmental Management Plan non-compliance
              situations this quarter, the second lowest level in two years. No critical
              (Level III) non-compliance situations have been recorded by the Project to
              date.
   Context:   Contractors and Esso/TOTCO/COTCO personnel are required to report all
    Project   situations that could put the Project out of compliance with the
Reportable    Environmental Management Plan and the suite of environmental,
 Situations   socioeconomic, and health plans filed by each prime contractor. There are
              two kinds of Project reportable situations: spills and non-compliance
              situations. In addition, the Project gathers reports related to compliance
              initiatives.
              • Spills of hydrocarbons or hazardous materials require immediate
                 reporting within one hour of discovery under the following
                 circumstances, with written follow-up reports required to be filed
                 within 24 hours:
                 -   All spills into a water body must be reported regardless of volume.
                 -   All spills onto a land surface greater than 150 liters (40 gallons) in
                     volume must be reported.
              • Non-compliance situations are ranked according to three levels, a
                 system designed to provide early warning of developing problems so
                 the Project can act to resolve issues before they escalate and result in
                 actual environmental damage.
                 -   Level I: A situation not consistent with specifications or other
                     requirements, but not an immediate threat to an identified sensitive
                     or important resource.
                 -   Level II: A non-compliance situation that has not yet resulted in
                     clearly identified damage or irreversible impact to a sensitive or




                                         23
                                                                     Reportable EMP Situations



                          important resource, but requires expeditious corrective action and
                          site-specific attention to prevent such effects.
                      -   Level III: A critical non-compliance situation, involving observed
                          damage to a specifically protected sensitive resource or a reasonable
                          expectation of impending damage.
                   • Compliance initiatives are situations that do not rise to any of the non-
                      compliance levels mentioned above. This classification is often used to
                      describe proactive steps taken in response to situations that are not yet
                      non-compliant but could lead to a non-compliance situation if not
                      appropriately addressed.
          Spills   One Project reportable spill took place on land this quarter. There were no
                   spills into water or wetland areas.
                   12 October: Approximately 190 liters of diesel fuel leaked from one of the
                   pipeline contractor's fuel trucks onto the pipeline right of way near the
                   village of Ndzana. A side valve was slightly twisted when the truck was
                   being pulled out from a soil depression near the open pipeline trench. Most
                   of the spilled diesel fuel was recovered during the clean-up. The spill was
                   confined to the pipeline right of way, it was properly cleaned up, and no
                   environmental damage was observed.
Non-Compliance     About 80% of the fourth quarter’s 25 recorded non-compliance situations
  Categories of    fell into five categories. In order of frequency, the top five categories were:
  Most Concern     working outside approved areas; effluent discharges; health issues; erosion
                   control; and waste management. About three-quarters of the non-
                   compliance situations recorded during the fourth quarter had been rectified
                   and closed out by the end of the quarter.
                   Working Outside Approved Areas
                   The twelve non-compliance situations recorded in this category included
                   cases of mining laterite without the prior submission and approval of an
                   environmental baseline assessment, clearing vegetation outside the limits of
                   the pipeline right of way, clearing vegetation prior to the payment of
                   individual compensation, parking of vehicles outside the pipeline right of
                   way, unauthorized construction of temporary pipeline right of way access
                   roads, and storing cut trees outside the pipeline right of way.
                   Effluent Discharges
                   The two non-compliance situations in this category included cases of
                   discharging treated sewage effluent from a camp septic tank into an open
                   channel, and discharging turbid water directly into a farmland area near the
                   Loule River crossing.


                                             24
                                                                  Reportable EMP Situations



                Health Issues
                The two non-compliance situations in this category included the absence of
                a contractor medical officer at the Ngaoundal Camp, and failure by a
                contractor medical supervisor to immediately notify COTCO's in-country
                medical advisor of a medical evacuation case.
                Erosion Control
                The two non-compliance situations in this category involved construction of
                a ramp over a watercourse without first installing adequate erosion and
                sedimentation control measures, and the implementation of poor water
                diversion procedures that resulted in a short period of increased sediment
                levels in a village water resource situated 15 meters from the pipeline right
                of way.
                Waste Management
                The two non-compliance situations in this category involved cases of not
                filling in a Waste Burial Record Form, and the open-air burning of
                inappropriate waste materials such as plastics and used oil filters.
Level II Non-   Seven of the 25 non-compliance situations recorded this quarter were
 Compliance     classified as Level II situations. Five of the seven Level II situations had
  Situations    been rectified, and the remaining two were in the process of being closed
                out at the end of the quarter.
                The Project conducts ongoing field inspections to make sure its wildlife
                protection measures are being properly implemented. These inspections
                had success this quarter, finding two violations of the Project’s anti-
                poaching programs. The two Level II non-compliance situations took place
                in the Nanga Eboko-Bélabo Induced Access Management Zone.
                Biologists use the term induced access to describe the potentially adverse
                ecological effects than can occur when new pathways are created in
                formerly hard-to-access locations. Such new access, if not appropriately
                mitigated, could lead to the degradation of habitat or increased hunting and
                poaching of wildlife. The Project’s Environmental Management Plan
                includes an array of mitigation measures designed to prevent induced
                access effects. These measures include, among other things, erecting of
                fences and gates, posting warning signs, and stationing guards at key new
                access points identified during pre-construction surveys.




                                         25
                                                                              Reportable EMP Situations




A bushmeat inspection road block within the Nanga Eboko-Bélabo Induced Access Management Zone
discovered a small quantity of bushmeat in a pipeline construction contractor truck. The inspection team
consisted of representatives from the environmental and security departments of the contractor, the COTCO
EMP team and a Cameroonian government representative. The team at this particular road block location
stopped and inspected 56 vehicles, trucks and crew transport buses as they were returning to the Nanga
Eboko construction camp. The bushmeat (smoked monkey meat) discovered in one of the vehicles was
confiscated, and the driver of the truck was dismissed in accordance with the Project’s zero tolerance anti-
bushmeat policy. To further reinforce the Project’s policy, the contractor conducted a series of toolbox
meetings, organized additional bushmeat inspections, and posted letters at camps and work sites
emphasizing the policy.




An inspection of the induced access mitigation measures that had been implemented in the Nanga Eboko-
Bélabo Induced Access Management Zone revealed that the pipeline contractor had not fully complied with
the requirements set out in their Environmental Management Plan. The contractor had failed to establish
manned barriers at several specified access roads leading to the pipeline right of way. As shown here, the
contractor immediately complied with the Environmental Management Plan provisions and posted trained
flagmen during the day and trained security guards during nighttime hours at the required locations. Aside
from this one non-compliance situation, the inspection showed that the contractor had properly implemented
all of the other induced access control measures required by the Environmental Management Plan.

                                                    26
                                                 Reportable EMP Situations



In addition to the two situations in the Nanga Eboko-Bélabo Induced
Access Management Zone, five other Level II non-compliance situations
were recorded this quarter.
• A contractor failed to follow its approved Health Plan by neglecting to
   immediately notify COTCO of an emergency medical evacuation. The
   contractor’s medical team evacuated an individual with a severe case of
   malaria from Dompta to Douala, and then to South Africa, but failed to
   notify the COTCO in-country medical advisor until after the evacuation
   was in progress. The Project reinforced its notification requirements and
   procedures with the contractor.
• Inappropriate waste materials, including plastics and used oil filters,
   were burned in an open-air burning pit at Komé Base Camp. Open air
   burning is permitted for wood and food wastes, but not for other
   materials. Open-air burning of wastes was stopped immediately once
   the non-compliance situation was discovered. A refresher training
   session was conducted for all of the contractor’s supervisors and
   foremen to reinforce the Project’s environmental requirements,
   particularly the ones relating to waste management.
• An inspection of a contractor guesthouse at the Ngoumou construction
   camp revealed that the dwelling was not up to Project standards. The
   building did not have sufficient potable water, and insect protection was
   not adequate at the doors and windows. The contractor was instructed
   to comply with Project worker housing standards immediately. No
   further occupation of the guesthouse was allowed until the problems
   were fixed and the guesthouse had been inspected for compliance. The
   follow-up inspection confirmed that the guesthouse had been brought
   up to standard. To help prevent a repeat of this situation, a pre-
   occupation checklist was issued to the contractor to help make sure that
   all housing complies with Project requirements before workers move in.
• The pipeline construction contractor constructed an access road to the
   pipeline right of way without waiting for EMP Group review and
   approval of an environmental baseline assessment for the work site. The
   unauthorized access road was constructed to avoid a wetland area. No
   trees were cut down to construct the road, and no irreversible
   environmental damage was observed. COTCO mandated the immediate
   closure of the access road once the non-compliance situation was
   discovered. During the closure, the contractor was required to assess the
   land for possible damages, pay appropriate compensation, and reclaim



                         27
                                                                                  Reportable EMP Situations



                         the disturbed land. A refresher training session was conducted for all of
                         the contractor’s supervisors and foremen to reinforce the Project’s
                         environmental requirements, with emphasis on the ones relating to land
                         use and clearing.
                      • Pipeline construction crews cleared native vegetation that had been
                         designated for preservation in a pre-construction environmental
                         baseline assessment. The native vegetation was to be preserved to help
                         disperse treated wastewater that was to be released at the site. Clearing
                         was immediately stopped when it was discovered and no irreversible
                         environmental damage was observed. On-site personnel were instructed
                         to scarify the site to hasten natural re-vegetation and to spread a layer of
                         straw on the site to preserve the superficial humidity of the soil. These
                         mitigation measures were immediately implemented, and a refresher
                         training session for all of the contractor’s supervisors and foremen was
                         conducted to reinforce the Project's environmental requirements relating
                         to land use and clearing.
Non-Compliance        There were 25 non-compliance situations, two compliance initiatives and
     Situations &     one reportable spill recorded in the fourth quarter of 2002. As noted above,
     Compliance       no Level III non-compliance situations have been recorded since the Project
 Initiatives Tally    groundbreaking in October 2000.
                      3 Total Reportable Situations by Country
                       4th Quarter 2002
                                                                 Total
                                                            Non-Compliance         Compliance     Reportable
                           Level I   Level II   Level III     Situations            Initiatives     Spills
              Chad               6          1          0                  7                   1             0
              Cameroon         12           6          0                 18                   1             1
              Total             18         7           0                     25              2             1

                      3 Non-Compliance Situations by Major Contractor
                       4th Quarter 2002
                                            Level I   Level II   Level III   Total
                      Wilbros Spie Capag       12          6           0       18
                      TCC                       3          1           0        4
                      Doba Logistics            1          0           0        1
                      Sogea-Satom               1          0           0        1
                      EEPCI                     1          0           0        1
                      Pride Forasol             0          0           0        0
                      Schlumberger              0          0           0        0
                      Modec                     0          0           0        0
                      David Terrassement        0          0           0        0



                                                 28
                                                                     Reportable EMP Situations



           3 Non-Compliance Situations by Category
               4th Quarter 2002
                                                       Level I   Level II   Level III   Total
           Work outside approved areas                     10          2           0       12
           Erosion control                                  2          0           0        2
           Waste management                                 1          1           0        2
           Health and safety                                1          1           0        2
           Effluent/wastewater discharges                   2          0           0        2
           Wildlife/bushmeat                                0          1           0        1
           Improper tree felling/vegetation clearing        1          0           0        1
           General construction practices                   0          1           0        1
           Induced access management                        0          1           0        1
           Cultural site management                         1          0           0        1


           Total                                           18          7           0       25

           Annual Summary: Reportable EMP Situations
           • The record for 2002 indicates a high level of compliance with the
               Project’s Environmental Management Plan.
           • There have been no critical (Level III) non-compliance situations
               recorded since the Project began.
           • The total number of non-compliance situations recorded per quarter
               followed a consistent downward trend in spite of a rising level of
               construction activity.
           • Reportable spills have involved only small quantities of materials (most
               often diesel fuel) and the number of reportable spills recorded each
               quarter has generally followed a downward trend.
           3 2002 Total Reportable Situations by Country
                                               Total Non-Compliance    Compliance       Reportable
           Level I    Level II    Level III          Situations         Initiatives       Spills
Chad           58            5           0                       63              10               1
Cameroon       62          19            0                       81              37              15
Total          120          24           0                       144              47            16




                                          29
                                                               Reportable EMP Situations




3 2002 Non-Compliance Situations by Major Contractor
                         Level I   Level II    Level III      Total
Wilbros Spie Capag           36         19              0        55
TCC                          26          1              0        27
David Terrassement           22          2              0        24
Sogea-Satom                  20          2              0        22
Doba Logistics               15          0              0        15
EEPCI                         1          0              0         1
Schlumberger                  0          0              0         0
COTCO                         0          0              0         0
Modec                         0          0              0         0
Coris                         0          0              0         0
Pride                         0          0              0         0


3 2002 Non-Compliance Situations by Category
                                              Level I       Level II   Level III   Total
Work outside approved areas                       45              6          0        51
Waste management                                  16              1          0        17
Erosion control                                    8              6          0        14
Health and safety                                  9              2          0        11
Socioeconomic issues                               6              3          0         9
Maintenance/handling of equipment                  7              0          0         7
Topsoil handling/management                        7              0          0         7
Effluent/wastewater discharges                     5              1          0         6
Improper tree felling/vegetation clearing          3              0          0         3
Inadequate SHE training                            2              0          0         2
Poor spill response                                2              0          0         2
Reclamation                                        2              0          0         2
Wildlife/bushmeat                                  0              2          0         2
Watercourse crossings                              1              1          0         2
Materials or machinery                             1              0          0         1
Extraction (fill materials, etc.)                  1              0          0         1
Oil/hazardous materials storage                    1              0          0         1
Water withdrawal                                   1              0          0         1
Administrative                                     1              0          0         1
Dust management                                    1              0          0         1
General construction practices                     0              1          0         1
Induced access management                          0              1          0         1
Cultural site management                           1              0          0         1


Total                                            120             24                 144




                              30
                                                                                                 Reportable EMP Situations



               3 2002 Level I and Level II Non-Compliance Situations
                                        Compared to Construction Activity (Total Workers on Job)




           (Level I and Level II Combined)
             Non-Compliance Situations
                                                                                                               12,701
                                                                                                              Workers




                                                 123

                                                           89       106

                                                                               52       56
                                                                                                 47
                                                                                                                25
                                                                                                        16


                                             1Q2001 2Q2001 3Q2001 4Q2001 1Q2002 2Q2002 3Q2002 4Q2002

               The combined number of Level I and Level II non-compliance situations per
               quarter has fallen during the overall course of the Project’s construction period.
               During the same period the total number of Project workers, and therefore the level
               of construction activity, has substantially increased.


               3 2002 Reportable Spills Compared to Construction Activity (Total
                                        Workers on Job)



                                                                                                              12,701
                                                                                                             Workers
Reportable Spills




                                                                          12

                                                                8                   9

                                                       4                                     5
                                             0                                                         1        1

                        1Q2001 2Q2001 3Q2001 4Q2001 1Q2002 2Q2002 3Q2002 4Q2002

               The total number of reportable spills has fallen over the course of the Project's
               construction period. During the same period the total number of Project workers,
               and therefore the level of construction activity, has substantially increased.




                                                                     31
     Reportable EMP Situations




32
                                                                               Section



                                                                                    4
                  Safety

                  N      o Project-recordable lost time incidents took place in the fourth
                         quarter of 2002 and the overall worker safety record at Project work
                  sites continues to be very good.
                  • The workers for facilities construction contractor TCC have topped the
                     21 million hour mark without a lost time incident. TCC is responsible for
                     constructing facilities throughout the Project area in both Chad and
                     Cameroon, including the central oilfield facility, the oilfield area crude
                     oil gathering stations, the export pipeline pump stations, and the
                     Pressure Reducing Station.
                  • As the year ended, the Project's oil well drilling operation in southern
                     Chad, including prime contractors Pride Forasol and Schlumberger, was
                     within a few hours of reaching five million hours without a lost time
                     incident.
                  • The Project’s offshore facilities workers in Singapore and Malaysia have
                     tallied over two million hours without a lost time incident.
                  The Project follows United States Occupational Safety and Health
                  Administration (OSHA) guidelines for recordability of on the job accidents
                  and injuries, even though the activities occur outside the United States.
Restricted Work   A total of 20 medical treatment and restricted work cases were recorded by
Cases & Medical   the Project during the fourth quarter.
    Treatments
                  • Slightly less than half of the recorded injuries involved the use of hand
                     tools.
                  • About one-third of the injuries resulted from slips, trips, and falls.
                  • The remaining recordable incidents were associated with people being
                     hit by falling objects and, in one case, a vehicle accident.




                                            33
                                                                                             Safety



Traffic Safety




                 This safety advisor for the Project’s pipeline construction contractor stationed
                 himself at dawn at the edge of a village in Chad to monitor the speed of vehicles
                 heading for work sites (inset radar speed gun). He was checking that the drivers
                 were heeding the reduced speed limit sign as they entered the village.


                 Annual Summary: Safety
                 A trend analysis of safety data for the year 2002 shows that the Project’s
                 overall good safety record has been maintained, despite the intense level of
                 construction activity, and the two previously reported fatalities that took
                 place on contractor-controlled work sites during the year.
                 • The traffic accident injury rate for the Project continues to be less than
                    half the rate for North American highways. The Project rate is just under
                    59 per 100 million miles driven, compared to the North American rate of
                    116 per 100 million miles driven.
                 • The Project’s Recordable Incident Rate since construction began remains
                    at 0.5 incidents per 200,000 work hours, much lower than the North
                    American construction industry average of 8.2 incidents per 200,000
                    work hours (as of the year 2000, the most recently published figures).




                                            34
                                                                                                                                  Safety



           Safety     As noted above, the Project uses the United States Occupational Safety and
    Performance       Health Administration (OSHA) standards as a reference for recording on-
Statistics for the    the-job injuries, even though the activities occur outside of the United
             Year     States. The Project safety statistics presented below are for
                      TOTCO/COTCO/EEPCI and their prime contractor workers.
                      3 Project Recordable Incidents
                          Incidents involving a location, property or activities owned, controlled or supervised by the Project or its
                          contractors.

                                                                                                            Year           Project
                                                   1st Qtr      2nd Qtr       3rd Qtr       4th Qtr         2002        (Since 2000)
           Fatalities                                    0             1             1             0             2                   3
           Lost Time                                     1             3             1             0             5                  11
           Restricted Work                               8             6             7            10            31                  61
           Medical Treatment Required                   11            11             4            10            36                  56
           First Aid Cases                             188           166           126           163           480               1,354
            (construction related)

           Worker Hours (thousands)                  8,410       10,590         8,810        12,469        40,279               59,279

           Trend Analysis
           Recordable Incident Rate                   0.48          0.38          0.30          0.32          0.37                 0.50
           Lost Time Incident Rate                    0.05          0.05          0.05          0.00          0.03                 0.05

                      3 Traffic Safety Tally
                                                                                                            Year           Project
                                                   1st Qtr      2nd Qtr       3rd Qtr       4th Qtr         2002        (Since 2000)
           Traffic Accidents                           32           58            20            26            136               235




                                                           35
                                                                                                               Safety




  Recordable                              Pre-task safety analysis provides one explanation for the Project’s good
Incident Rate                             work site safety record. The downward trend correlates closely to the use of
     Analysis                             an on-the-job safety procedure called a Job Safety Analysis, or JSA. As the
                                          number of JSAs has gone up, the recordable incident rate has been on a
                                          downward trend.

                                          3 Job Safety Analysis (JSAs) vs. Recordable Incident Rate (RIR)
                                              0.48
              Job Safety Analysis Tally




                                                                                                0.32
                                                              0.38
                                                                                            Recordable
                                                                                           Incident Rate
                                                                              0.30
                                                                                            677 JSAs

                                                                              409

                                                              128
                                              64

                                            1Q2002          2Q2002           3Q2002          4Q2002




   A Job Safety Analysis (JSA) involves a group of
   workers collaborating as they talk through a
   task, identifying all the safety issues that might
   arise. Often, an expert safety adviser
   participates in the JSA. The process helps
   avoid or reduce work site injuries by identifying
   potential dangers and agreeing on how to avoid
   or mitigate them before performing the work.
   JSAs are recorded and shared with other work
   teams.




                                                                     36
37
     A typical day for this safety advisor at an oilfield area construction site involves checking equipment and worker
     behavior. A big part of his job is establishing a rapport with the workers so he can motivate them to collaborate as a
     group to improve work habits and enhance overall job site safety. As he walks the site he greets a pair of workers
     (upper left), asks a worker to correct the safety line attached to the harness the worker must wear anytime he is more
     than two meters off the ground (upper right), asks a pair of workers to put their earplugs in while using a noisy piece
     of equipment (lower left), makes sure a worker has his “confined space” certificate to work inside an underground
     vault (lower center), and checks for proper installation of a safety cable on a compress air hose (lower right).
                                                                                                                               Safety
     Safety




38
                                                                                       Training
                                                                                 Section



                                                                                   5
                Consultation & Communication

                T   he Project conducted over 680 public consultation sessions in the
                    fourth quarter of 2002, reaching more than 23,000 people, a
                significant increase compared to the previous quarter. The increase was
                required, in large part, to support the pipeline construction activity in
                southern Chad.
Preparing for
    Offshore
Construction




                The Project held a special consultation with fishermen in the Kribi area in
                preparation for the start of offshore construction in the first quarter of 2003.
                About 200 fishermen from nine villages attended the session. Some attending
                the meeting were concerned because they fish with drift nets that could be
                damaged if the nets drift into the construction area and become entangled in
                equipment. They were assured that the Project has a policy of compensating
                for damage directly caused by the Project, and that this policy will extend to
                their situation.




                                         39
                                                                Consultation & Communication



Area Specific Oil
  Spill Response
           Plans




                    As described in the previous Quarterly Report, the Project’s Area Specific Oil
                    Spill Response Plans have been drafted and are now undergoing public
                    review. The first public consultation meeting was this one in late November,
                    held for local government officials at Komé Base Camp in southern Chad.
                    Additional meetings were held in villages throughout the Oilfield Development
                    Area and along the Chadian portion of the crude oil export pipeline in
                    November and December. Similar meetings were set to begin in Cameroon in
                    January 2003.




                    The series of public consultation meetings regarding the Project’s Area
                    Specific Oil Spill Response Plans also included this session before the
                    National Assembly of the Republic of Chad.




                                             40
                                                                 Consultation & Communication



Tour of Pipeline
  Construction
         Site by
     Diplomats




                   Diplomats stationed in Cameroon, representing a number of countries,
                   responded to an invitation by the Project to tour a pipeline construction site this
                   quarter. Accompanied by government representatives from Cameroon and
                   Chad, and the local representative of the World Bank, the diplomatic corps got
                   a chance to view the progress of construction and to hear the views of area
                   residents concerning the Project.

 Chad Issues &      Issue: The build up of construction employees in the oilfield area has
       Actions             been putting pressure on the available housing in certain
                           communities, driving up rental costs.
                   Action: TCC, the facilities contractor and the largest employer of Project
                           workers in the oilfield area at the present time, has put into
                           effect a home construction loan program. Loans to TCC’s
                           qualified non-local Chadian workers are provided through the
                           “Economat” commissaries, set up as part of the Project’s
                           program to mitigate inflation by allowing employees to buy
                           food and other essentials at market prices, thus reducing
                           pressure on existing local markets.
                            Under the home construction loan program, the commissaries
                            provide loans of up to 50,000 FCFA for traditional homes, and
                            up to 100,000 FCFA for metal-roofed houses. TCC’s home
                            construction loan program builds on lessons learned in a
                            similar program that was effective in combating housing
                            inflation in Dompta, Cameroon.
                    Issue: Four villages along the Project-upgraded road in southern
                           Chad complained that speed bumps had not been installed at
                           the entrance and exit to their communities.
                   Action: At the request of the villages, the Project has revisited the initial
                           safety studies conducted when the road was being upgraded.
                           Speed bumps have now been installed at the entrance and exit
                           of each of the four villages.

                                             41
                                        Consultation & Communication



 Issue: Over time, fewer people have been choosing in-kind goods for
        individual compensation for land, crops, and other direct
        Project-related impacts. Because the Project’s individual
        compensation program has been underway since 1998, many
        people have already received all the items they might desire
        from the offered list of in-kind goods. The Project tries to
        encourage families to select in-kind compensation rather than
        cash. There are few banking facilities available in the south of
        Chad and women tend to receive less benefit from cash
        compensation because of cultural factors.
Action: The Project undertook a consultation process to determine what
        new items should be added to the in-kind individual
        compensation list.
        The list has been expanded to include household labor saving
        devices and other items such as macaroni machines, oil presses
        for peanut or shea nut oil, peanut mills, and very large cooking
        pots. Some of the items can improve living conditions by
        making it possible for a family to bring in extra income by
        providing milling or pressing services to their neighbors.
        In addition, the new in-kind compensation offerings include
        some very bulky items that rural people find it very difficult to
        obtain. Some of the new bulky items being offered include
        sheet metal for roofs, bags of cement, stabilized brick presses,
        and shovels. People in the countryside do not have vehicles and
        large or bulky items cannot be easily carried long distances on
        foot. People also have difficulty obtaining these items because it
        is dangerous to travel to the city carrying large sums of money
        to purchase them.
 Issue: Nomadic cattle herders drive their livestock from south to
        north each year in search of grazing land and water. In 2002,
        this seasonal migration coincided with the Project’s pipeline
        construction activities in southern Chad. The Environmental
        Assessment anticipated the potential for the open pipeline
        trench and other construction activities to interfere with the
        annual nomadic migration.
Action: The Project put together a mobile consultation effort to reach
        the herders. (Thought was given to conducting a radio
        information campaign but the nomads generally do not possess
        radios.) The consultations educated the nomads about the
        special pipeline trench crossings created by the Project that


                       42
                                         Consultation & Communication



        would allow their herds to continue on their way north.
        Monitoring of the nomads during the annual migration period
        showed that the consultation program was effective.
 Issue: A small spontaneous settlement has grown up across the road
        from the Gadjibian pipeline construction camp and storage
        yard. There was some concern that the settlement could become
        a permanent one, despite the Project’s strict policies against at-
        the-gate hiring, and communications efforts to discourage job
        seekers from moving to the area.
Action: A study revealed that only 14% of the settlement's residents
        were job seekers. The vast majority of residents came to the site
        as entrepreneurs, hoping to sell goods and services to the
        pipeline construction workers based at the camp.
        Experiences during the pipeline construction effort in
        Cameroon suggested the settlement will naturally dissipate
        when the camp closes and the workers leave the area. Camp
        closure began in December and soon there will be no reason for
        merchants or job seekers to remain in the area.
        In the meantime, the Project took action to improve safety and
        certain living conditions for settlement residents until the camp
        closure has been completed. For example, plastic water tanks
        were provided in the community to supply safe drinking water.
        The Project also built a fence and gate barrier so foot traffic was
        forced to cross at standard marked locations, a procedure that
        helped improve pedestrian and traffic safety. Project health
        inspectors also checked the restaurants that have been
        established in the settlement.




                       43
                                           Consultation & Communication




If past experience holds true, this spontaneous settlement of opportunistic
businesses and job seekers across from the Gadjibian pipeline construction
camp in southern Chad will dissipate soon after the camp closes down,
sometime in the first quarter of 2003.

 Issue: Residents along the pipeline route have been stealing fiber optic
        cable thinking that they could make money by stripping copper
        out of the cable and selling it.
Action: The fiber optic cables do not contain any metal. Local
        Community Contacts took samples of the cable around to
        villages and herders in the Project area and demonstrated in
        consultation sessions that the cable was not worth stealing.
 Issue: Dust in villages along Project-area roads continues to be one of
        the primary concerns raised in consultation meetings and with
        the Project’s Local Community Contacts.
Action: The Project has launched an improved dust control program.
         -   A fleet of eight road watering trucks were assigned to dust
             control duty for the upgraded road used by Project freight-
             hauling convoys through southern Chad.
         -   Twenty road watering trucks are on dust control duty on
             the roads in the Oilfield Development Area.
         -   Several sections of road in the Oilfield Development Area
             will be treated with DBST, a type of paving material.
         -   Additional tests are underway to investigate alternative
             dust suppression agents commonly used in Africa,
             including the low grade molasses by-product of sugar cane
             processing.
         It should be noted that, compared to Cameroon, many more
         villages were bypassed by the Project-upgraded road in
         southern Chad. A side benefit of this traffic safety measure was

                        44
                                                          Consultation & Communication



                          a reduction in exposure to dust for the inhabitants of the
                          bypassed villages.
Cameroon Issues    Issue: The village of Nkolngok, southwest of Yaoundé, asked that its
      & Actions           regional compensation funds be applied to a project to extend
                          the national electricity grid to the community. A local family
                          had already purchased the required electrical cable, but utility
                          poles and a connection to the grid were still needed.
                  Action: COTCO facilitated the electrification project by helping the
                          villagers get a bid from a local contractor, providing advice on
                          evaluating the contractor’s qualifications, and on making sure
                          the quoted price was fair. The village residents raised the
                          additional money required to supplement the community’s
                          allocated amount of regional compensation from the Project
                          and to fully fund the electrification project, which will be
                          completed in the first quarter of 2003.
                          As described in previous Quarterly Reports, many
                          Cameroonian communities requested electrification projects
                          during consultations to support the Project’s regional and
                          community compensation program. As in Nkolngok, COTCO
                          responded to these electrification requests by facilitating
                          contacts between the communities and the Cameroonian
                          electricity utility. This approach made sure a proposed project
                          was viable and cleared the way so community or regional
                          compensation funds could be applied to the work.
                   Issue: About a dozen residents in the Bélabo and Dompta areas
                          complained that grinders they had received from the Project
                          were not working properly. The grinders had been distributed
                          to them as in-kind goods under COTCO's individual
                          compensation program. Grinders are highly valued items in
                          rural Cameroon, as a household labor saving device and as a
                          means of earning extra income supplying grinding services to
                          neighbors.
                  Action: All the grinders were repaired or replaced at the Project’s
                          expense. In eight cases the grinder mechanisms had broken and
                          were repaired. In the other five cases the wrong type of grinder
                          had been requested and these grinders were replaced with the
                          proper type. (Two different types of motorized grinders had
                          been offered, one type to break corn and other dry cereals into
                          meal, and the other type to finely grind peanuts or manioc into
                          a paste.)


                                         45
                                        Consultation & Communication



 Issue: As indicated in previous Quarterly Reports, some residents
        along the pipeline right of way have realized that work on the
        pipeline is winding down. In particular, there has been some
        social unrest in villages in the vicinity of Yaoundé, as village
        residents seek to improve their economic circumstances before
        Project construction crews completely depart their area. Many
        of these residents have utilized the Project’s formal grievance
        procedure, filing claims for damages they say have resulted
        from pipeline construction.
Action: As the year was ending, most of the grievances had been
        resolved. The Project dispatched a grievance coordinator to the
        area to proactively collect grievances and expedite their
        resolution on the spot if possible. The grievance coordinator
        was stationed in the field at the pipeline construction
        contractor’s camp and worked closely with the Project’s right of
        way land compensation assistants and Local Community
        Contacts.
        Nearly all the filed grievances involved supplemental
        compensation claims alleging damages during pipeline
        construction, after individual compensation had already been
        paid. Roughly 90% of the claims were settled through
        negotiation.
 Issue: One of the first of the Project’s construction camps, the one at
        Bélel, has now been completely vacated by contractor Sogea
        Satom. The contractor wished to turn the camp over to the local
        government. The facility is badly needed since Bélel is a
        government subdistrict headquarters but has no offices or
        housing for its officials.
Action: COTCO assisted in making sure that a formal legal process was
        followed to ensure that ownership responsibility was clearly
        established during the hand over of the camp and its facilities.
        This assistance was aimed at preventing occupation by
        squatters and helping to ensure the long-term sustainability
        and proper maintenance of the facility.
        Among other steps, the Project installed concrete monument
        markers around the site as required under Cameroonian law in
        order to record property ownership boundaries, the same
        process followed to mark the boundaries of the pipeline right of
        way.



                       46
                                                Consultation & Communication




    This former construction camp has been closed and will now be turned over to
    the local government at Bélel. The Project facilitated the turnover to make sure
    that proper ownership would be established in accordance with Cameroonian
    law.


    Annual Summary: Consultation & Communication

3   Consultation Meetings
                    1st Qtr         2nd Qtr    3rd Qtr      4th Qtr     Cumulative
                     2002            2002       2002         2002         2002
Chad
 Sessions                159             260        186          253            858
 Attendees             7,881           7,557      4,061       12,154         31,653
Cameroon
 Sessions                688             189        325          432          1,634
 Attendees            26,622           8,168      9,887       11,290         55,967
Project Total
 Sessions                847            449         511          685           2,492
 Attendees            34,503          15,725     13,948       23,444         87,620




                               47
                                                            Consultation & Communication



                  In addition to the above tabulation and the events described for the
                  fourth quarter, the following key developments took place in the first
                  three quarters of 2002.

  First Quarter   • Consultations began for the regional and community compensation
          2002        program in Cameroon.
                  • Consultation remained active in Chad regarding individual land use
                      compensation in the oilfield area where various facilities have now
                      been precisely located (e.g., power line right of ways, oil well drilling
                      pads, etc.).

Second Quarter    • Consultation started in southern Chad in preparation for the arrival
         2002         of pipeline construction teams in the third quarter.
                  • Consultations began in connection with the community
                      compensation program in Chad.
                  • Consultations began with villages in the vicinity of oil wells that
                      would be tested in cases where on-site flaring would be involved.
                  • Community work began in both Chad and Cameroon on the post-
                      construction disposition of temporary Project facilities such as
                      bridges and camps.

 Third Quarter    •   In response to several public consultation comments, an action plan
         2002         was drawn up to improve some of the conditions in the Komé Atan
                      settlement that has developed over the years across from the
                      Project’s Komé Base Camp.
                  •   Consultations continued in Cameroon to resolve the status of a
                      temporary construction bridge crossing the Lom River. Local
                      residents want the bridge to remain in place, but the Project is
                      required to remove the structure under the provisions of the
                      Environmental Management Plan.




                                          48
                                                                        Training
                                                                 Section



                                                                   6
Compensation
T   he Project has so far paid approximately 6.75 billion FCFA ($10.4
    million) in cash and in-kind compensation to individual land users.
Nearly 519 million FCFA ($798 thousand) was added to the total in the
fourth quarter of 2002.
• In Chad, individual compensation distributed in the fourth quarter
   totaled 215 million FCFA ($330 thousand).
• In Cameroon, individual compensation paid in the fourth quarter
   was nearly 304 million FCFA ($467 thousand).




Most of the Project’s individual compensation was paid long ago, the program
having been in place since 1998. However, the payment of individual
compensation continues for various reasons. In some cases, as construction
proceeds, it becomes clear that additional land will be needed. In addition, in
the Oilfield Development Area, exact locations are still being determined for oil
wells and the network of pipes that connect the wells to gathering stations and
the central oilfield facility.


                         49
                                                                            Compensation



  Regional &   The Project’s regional and community compensation programs made
  Community    good progress in the fourth quarter.
Compensation   • In Cameroon, implementation of the program has started, the
                  culmination of a nearly year-long consultation effort to help
                  communities choose their micro-development projects.
               • In Chad, consultations are well along in nearly all of the
                  communities eligible for the program. Nearly all of them have
                  chosen their projects.
               Cameroon
               In Cameroon, the compensation programs to supplement individual
               land compensation are called “community and regional compensation.”
               While the Project’s individual compensation program addresses direct
               impacts on specific households, the supplemental compensation
               program deals with the more diverse and geographically dispersed
               longer term impacts related to the construction and operation of the oil
               transportation pipeline, the two pump stations, and the Pressure
               Reducing Station.
               In mid-December, the Project delivered the first community and
               regional compensation to four locations in Cameroon - Ngomedzap,
               Grand Zambi, Makouré I, and Makouré II.
                                      Development Project                Cost
               Ngomedzap       Text books for some primary           1,650,000 FCFA
                               schools in the Subdivision
                               Medical equipment (blood pressure     2,500,000 FCFA
                               gauges, surgical equipment, scales,
                               clothing) for the District hospital
                               Two computers, two printers and       2,350,000 FCFA
                               two voltage regulators for two
                               Government higher schools
               Grand Zambi     Medical equipment for the              982,100 FCFA
                               community infirmary
               Makouré I       Text books for the village primary      78,000 FCFA
                               school
               Makouré II      Text books for the village primary     161,500 FCFA
                               school

               Leading up to these first steps in the implementation of the community
               and regional compensation program in Cameroon, residents of the
               eligible 240 villages and 26 arrondissements had selected improvement
               projects following a multi-step consultation process. Selected projects
               include schools and school improvements, clinics and clinic



                                       50
                                                             Compensation



improvements, water wells, agricultural supplies, and various types of
community buildings.




Computers, medical equipment, and text books were delivered to the village of
Ngomedzap in December, marking the first steps in the implementation of the
Project's regional and community compensation program in Cameroon.

Chad
In Chad, the Project's compensation program to supplement individual
land compensation is called “community compensation.” Similar to the
corresponding program in Cameroon, the community compensation
program in Chad deals with the more diffuse and indirect longer term
impacts associated with the construction and operation of the
permanent Project facilities including oil wells, oil processing facilities,
and the oil transportation pipeline.
GTZ, the NGO contracted by the Project to manage the community
compensation program in Chad, reports that 72 of the 80 villages,
cantons, and sub-prefectures that are eligible for the program have
proposed micro-development projects. School buildings, water wells,
and market structures have been the most popular choices.
In some cases, the communities wish to apply the Project's community
compensation to larger projects that could not be fully funded by the
program’s prescribed compensation allocation. A process is still
underway in these situations to be sure that the communities achieve
full funding for their proposed larger-scale projects. In other cases,
proposals are still under study to ensure that the communities can
sustain the projects once they have been completed.




                        51
                                                                            Compensation




                At this meeting in Gadjibian, GTZ’s director for implementing the Project’s
                community compensation program in Chad facilitated a community decision on
                a micro-development project. The people chose to add a second market
                structure to the village. The new market will be held in the afternoon, thus
                giving local people an opportunity to benefit from the crowd of people who
                already come to town for the existing morning market, which is dominated by
                large regional vendors.

   Improved     The demonstration farm phase has been launched in the villages
  Agriculture   participating in the improved agriculture program, one of the options
Resettlement    the Project offers to farmers who are eligible for resettlement but would
      Option    rather not relocate. ORT, the NGO contracted by the Project to manage
                the program, helped residents in ten oilfield area villages create 16
                agricultural associations. Although the program has been aimed at
                farmers eligible for training under the Project's resettlement program,
                all village residents are encouraged to join the associations.




                                        52
53
     The Project's improved agriculture program, which began in the third quarter of 2002, has progressed to the next stage.
     Each association has chosen a technical delegate to receive in-depth training in improved farming techniques. The
     delegate will in turn become a resource in the community by teaching the new techniques to others in the association.
     Here, representatives of ORT hold an outdoor classroom session, demonstrate how to lay out a plot, and teach the
     importance of weeding.
                                                                                                                               Compensation
                                                                       Compensation




          Annual Summary: Compensation
          The Project has paid a total of approximately 6.75 billion FCFA ($10.4
          million) in individual compensation since it began making payments,
          with 2.0 billion FCFA ($3.1 million) added in 2002.
          • In Chad, individual compensation paid during the year 2002 totaled
                over 874 million FCFA ($1.3 million).
          • In Cameroon, individual compensation paid during 2002 added up
                to over 1,148 FCFA ($1.7 million).

          3 Individual Compensation (Millions FCFA)
                            1st Qtr    2nd Qtr     3rd Qtr   4th Qtr   Total
                             2002       2002        2002      2002     2002
Chad
 Road Related                  70.0         70.2      12.2       7.5    159.9
 OFDA Related                 205.9        129.6     171.3     207.5    714.3
Cameroon
 Road Related                   1.2          2.0       4.5        .4       8.1
 Pipeline Related             269.9        165.3     401.9     303.4   1,140.5
Project Total
 Road Related                  71.2         72.2      16.7       7.9    168.0
 Pipeline/OFDA Related        475.8        294.9     573.2     510.9   1,854.8




                                      54
                                                                             Compensation
                                                                             Section



                                                                               7
              EMP Monitoring &
              Management Program

              J  ust as the Project was completing a series of actions to improve
                 certain conditions in the Komé Atan settlement, fire destroyed much
              of the community. The fire caused no serious injuries and the Project
              immediately offered support to the government’s relief efforts in the
              settlement, which is located across the road from the Komé Base Camp.
Reclamation   As Project construction enters its final phases, Environmental
              Management Plan monitoring has increasingly focused on proper site
              reclamation as crews complete their work.




              Reclamation of the pipeline right of way has advanced rapidly and is about
              40% complete. The remaining 60% will be reclaimed in the first half of 2003. At
              this location in southern Cameroon, farmers have moved onto the reclaimed
              right of way and planted crops such as pineapples and bananas. In other
              locations the natural vegetation has been rapidly retaking the cleared land.
              The EMP requires that work sites be reclaimed to a condition that will allow
              crop land to be productive again, or that will allow natural vegetation to
              reestablish itself. In many locations along the right of way the contractor
              stockpiled topsoil and replaced it during reclamation to achieve compliance
              with this EMP requirement.


                                      55
                                                    EMP Monitoring & Management Program




                 At each oil well drilling site the pits used as reservoirs for drilling mud must be
                 reclaimed once the well has been completed. This EMP monitor takes a
                 sample of the mud in a reservoir pit as part of a study aimed at improving the
                 Project’s well site reclamation effort. In another step taken to speed
                 reclamation, the Project has put a mud recycling program into effect, reducing
                 by half the quantity of mud required to drill an average well.

     Komé Atan   On 18 December, a cooking fire flashed out of control and spread
Improvements &   through the Komé Atan settlement, just across the road from the
      Recovery   Project’s Komé Base Camp. Fortunately, there were no fatalities or
                 serious injuries, although one burn victim was treated at a Project camp
                 clinic. Project fire fighters responded with their equipment immediately.
                 However, the fast moving fire destroyed about 60% of the settlement.
                 Within a few weeks, the resilient residents of Komé Atan had largely
                 rebuilt their settlement. They are accustomed to fires of this nature
                 because the thatched buildings utilized in such temporary settlements
                 burn easily and very quickly.
                 The Project moved quickly in the days immediately following the fire to
                 assist the Chadian government with its relief efforts. The Project:
                 • Donated surplus wood from shipping crates to the government for
                    distribution to people who used it to construct new homes.
                 • Donated used clothing for distribution by the government.

                                           56
                                  EMP Monitoring & Management Program



• Under the direction of government representatives and working
   with residents of the settlement, surveyed and cleared new streets
   and drainage channels.
   Ironically, the fire has opened the way for making an important
   community improvement. The settlement had grown up
   haphazardly over some years and therefore had no streets or proper
   drainage. The newly rebuilt village also sits further back from the
   main road, providing an improved margin of safety for pedestrians.
In addition to government and Project humanitarian aid, a number of
Project employees contributed cash for laborers to build new homes for
those who had no resources, such as single mothers with children. (The
Komé Atan school survived the fire. The school, as described in
previous Quarterly Reports, had been built through donations from
Project employees.)




The 18 December fire at Komé Atan spread very quickly, as this aerial view
shows, and destroyed the area outlined in red. Project firefighters rolled out
their equipment and worked to contain and extinguish the fire.




                          57
                                  EMP Monitoring & Management Program




Traditionally, Project workers hold a holiday season event for the children of
Komé Atan. This year, the festivities had to be delayed because of the fire, but
the organizers did manage to hold the annual party. Nearly 175 children
received treats and presents.

Just before the fire struck at Komé Atan, the Project had taken a number
of steps aimed at improving certain living conditions in the settlement.
These improvements include two water wells, replacement of an
unsanitary and unsightly roadside drainage ditch, a limited trash
collection program, a mosquito fogging program, and the aiming of
some new camp lighting to improve safety along the main road between
the camp and the settlement. All of these improvements have now been
completed.




                         58
                                                   EMP Monitoring & Management Program




                 A series of community improvements initiated by the Project before the fire at
                 Komé Atan have been completed, including the installation of two water wells.
                 Other improvements were aimed at improving certain sanitation and safety for
                 community residents.

Spill Response




                 The pilots of a heavy freight aircraft, an Antonov AN-12, landed too far down
                 the Komé air strip this quarter, and skidded off the end of the runway. Although
                 no injuries occurred, the potential for a spill of aircraft fuel existed. The
                 Project’s spill response measures were immediately implemented and were
                 successful. The plane’s fuel tanks were drained and only a small amount of
                 fuel was lost.


                                          59
                                                        EMP Monitoring & Management Program



      Water Well
       Program
                    The Project has been converting
                    some water wells drilled to support
                    construction activities into village
                    water supply wells. This well,
                    originally drilled to provide water for
                    the road upgrade construction effort
                    in southern Chad, was purposely
                    located so it could ultimately be
                    turned over to the village. A foot
                    pump was installed on the well by
                    the Project when construction work
                    was completed and now the women
                    of the village of Gadjibian do not
                    need to walk as far to get water.




 Context: Day-to-   A staff of EMP monitors maintains a constant watch over the
Day Construction    construction effort in the field. These individuals evaluate the work in
      Monitoring    relation to the various disciplines covered by the Project’s
                    environmental documentation, from water monitoring to archaeology
                    to hiring practices.
                    For example, inspections to check compliance with the Project’s wildlife
                    protection requirements had success this quarter in a designated
                    environmentally sensitive area in northern Cameroon. Inspections
                    identified two Level II non-compliance situations in the Nanga Eboko-
                    Bélabo Induced Access Management Zone. These incidents related to
                    the control of access to the pipeline right of way, and the transportation
                    of a small quantity of bushmeat by a Project worker.
                    For more information on non-compliance situations recorded in the
                    fourth quarter, see the section on Reportable EMP Situations.
                    For more information on another important type of monitoring
                    conducted during construction, see the section on Archaeology & Cultural
                    Resources.




                                               60
61
     The Project’s staff of environmental monitors continually evaluate the activities of the Project’s construction contractors. In this
     typical day an EMP monitor checked that the output of a trench-drying water pump was being properly directed (top left), that
     topsoil was being properly returned to the right of way (top right), that pipeline construction was being contained within the
     marked right of way (bottom left), that spill containment barriers were in place around a water withdrawal pump (middle right),
     and that bioremediation of some hydrocarbon-contaminated soil was proceeding correctly (bottom right).
                                                                                                                                            EMP Monitoring & Management Program
                                                  EMP Monitoring & Management Program




                  Annual Summary: EMP Monitoring & Management
                  In addition to the events described above for the fourth quarter, the
                  following key developments took place in the first three quarters of
                  2002.

  First Quarter   • The Project commissioned the Wildlife Conservation Society’s
          2002       Cameroon Biodiversity Program to conduct a study of the primates
                     that inhabit the forests around Bélabo. Ultimately, the study
                     validated the Project’s decision prior to construction to move the
                     pipeline route out of the main portion of the Deng Deng forest.
                  • Meteorological stations were installed at the central oilfield facility
                     and Pump Stations 2 and 3. The stations gather data such as wind
                     speed, wind direction, temperature, and rainfall. The baseline
                     information will support the Project’s air quality monitoring
                     program that will begin in the second quarter of 2003.

Second Quarter    • An independent study of the impact of the Project on the economy of
         2002        Cameroon, funded by COTCO, projected significant short- and long-
                     term economic benefits.
                     -   During the three-year construction phase, the Project's
                         procurement of goods and services and payment of wages in
                         Cameroon will increase the Gross Domestic Product of the nation
                         by an estimated 2%.
                     -   During the 25-30 year operations phase, the Project’s
                         procurement of goods and services, payment of wages, and
                         payment of pipeline tariffs will raise the Gross Domestic Product
                         of Cameroon by an estimated 1%.
                  • The Project launched initiatives for village anti-bushmeat poaching
                     and wildlife conservation education campaigns in several important
                     ecological areas in southern Cameroon.

 Third Quarter    • Drafts of all six area-specific oil spill response plans were completed
         2002        and submitted to the governments of Chad and Cameroon for
                     review.




                                           62
                                                           Section



                                                             8
Local Employment

F   or the first time since construction began, the size of the Project’s
    direct workforce has started to fall. The Project’s overall peak
workforce was reached in November with a total of 13,156 workers. In
December, total employment had dropped back down from the peak to
a level about the same as at the end of the previous quarter.
As construction moves forward towards completion, Project contractors
will be releasing workers as more and more tasks are completed,
triggering a steady decline in construction-related employment as
anticipated in the Environmental Assessment.
Fourth Quarter Ending Employment Levels
Total Project-wide employment at the end of the fourth quarter of 2002
was 12,701, essentially unchanged from the ending employment figure
for the previous quarter.
• Demobilization of workers no longer needed for pipeline
   construction work reduced total employment in Cameroon by over
   900 workers at the end of the quarter.
• However, intensive construction activity at the various oilfield area
   facilities caused an increase in employment in Chad, with over 4,700
   Chadian citizens on the job at the end of the quarter.
Fourth Quarter Wage Payments
Wages paid to Chadian and Cameroonian workers in the fourth quarter
of 2002 totaled almost 7.8 billion FCFA ($12 million).
• Total wage payments to Chadian workers approached 4.1 billion
   FCFA ($6.3 million).
• Total wage payments to Cameroonian workers were 3.7 billion
   FCFA ($5.7 million).




                       63
                                                              Local Employment




These Chadians have jobs working in the pipefitting shop at the Komé central
oilfield facility construction site. They received Project funded training, on-the-
job mentoring, and have passed certification tests permitting them to perform
high-precision welding tasks.




It takes great skill and care to load these “guns,” which are lowered into newly
drilled oil wells and fired to open up flow paths for the oil. This group of
Chadians has been trained to perform this highly technical work for the
Project’s oil well servicing contractor.




                          64
                                                           Local Employment




Annual Summary: Employment
The Project paid a total of 28.1 billion FCFA ($43.2 million) in wages
during 2002 to Chadian and Cameroonian workers.

3 2002 Summary Tally of Workforce Quarter by Quarter
                          End of 1st     End of 2nd     End of 3rd     End of 4th
                           Qtr 2002       Qtr 2002       Qtr 2002       Qtr 2002
  Chad
   Nationals                    3,654          4,090         4,166          4,764
   Expatriates                    760          1,261         1,751          2,357
  Total Chad                    4,414          5,351         5,917          7,121
  Cameroon
    Nationals                   5,844          5,645         5,796          4,879
    Expatriates                   690            761           761            701
  Total Cameroon                6,534          6,406         6,557          5,580

  Project Total                10,948         11,757        12,474         12,701

Chadians and Cameroonians make up about three-fourths of the Project’s total
workforce. For the first two years of construction this percentage was much
higher, at times over 90%. However, the national worker percentage fell
somewhat in the latter months of 2002 as the Project’s facilities construction
contractor added a significant number of experienced skilled workers from the
Philippines. These workers were brought into Chad with the assistance and
approval of the National Coordination of the Republic of Chad and ONAPE
(Office Nationale d'Appui a la Promotion de l'Emploi) in order to accelerate the
pace of construction and ensure that oilfield area facilities are built in
accordance with the Project's rigorous quality standards.




                         65
                                                                                                            Local Employment



3 National Employment Level Trends by Country
                                               Chad



  Number of National Workers
                                                                                                           4,764


                                                                       4,090           4,166
                                                          3,654




                                                        1Q2002       2Q2002           3Q2002           4Q2002




                                                       Cameroon
                          Number of National Workers




                                                             5,844            5,645            5,796
                                                                                                                4,879




                                                          1Q2002        2Q2002           3Q2002            4Q2002




                                                                      66
                                                                 Local Employment




3 2002 Employment Category Levels by Country
   (National Project Workers Only)


                         Supervisory          Skilled     Semi-Skilled         Unskilled
Chad                             144              2,789           629              1,202
Cameroon                         251                997         1,351              2,280

Project Total                        395         3,786           1,980             3,482




                                Supervisory
                                    4%



     Unskilled
       36%
                                                    Skilled
                                                     39%




                 Semi-Skilled
                    21%                 Skilled & Semi-Skilled Workers = 60%




The majority of Chadians and Cameroonians hired by the Project are working
in skilled or semi-skilled jobs. Skilled jobs include such positions as
archaeological aides, two-way radio repair technicians, and welders. Examples
of semi-skilled jobs include food service assistants and welder helpers.
Together, these two categories amount to about 60% of the national workforce
assembled for the Project. Another 4% of the national employees hold
supervisory jobs.




                           67
     Local Employment




68
                                                                                      Section



                                                                                        9
                   Local Business Development

                   N    early 59 billion FCFA ($90 million) was spent by the Project
                        buying goods and services from Chadian and Cameroonian
                   suppliers during the fourth quarter of 2002.
Two Years Later,
  How Are They
         Doing?




                   The first edition of this report, the Annual Report for 2000, told the stories of
                   two Ngaounderé, Cameroon, businesses. A vegetable co-op and a
                   veterinarian had been recruited by the catering manager for the Project road
                   contractor. The veterinarian, Dr. Mohamadou Basirou, was constructing a
                   meat packing facility to supply the Project. The Project facilitated the
                   establishment of this business by supplying a refrigeration unit as credit
                   against future purchases. The vegetable co-op had funded a village school
                   using proceeds from selling fruits and vegetables to the Project thanks to the
                   contractor’s donation of seeds, technical advice, and by making advance
                   purchasing commitments. Now, two years later, a return visit asks how these
                   two businesses are doing.




                                             69
                                                           Local Business Development




Dr. Basirou reports that he did complete
construction of his meat packing facility and
that he continues to sell beef to the Project,
even though the road contractor has finished
work and demobilized. He says he now sells
meat to the pipeline construction contractor
and to the contractor building the pump
station at Dompta. Looking ahead, what will
he do when all the Project’s construction
work has finished? Dr. Basirou says he plans
to expand to more profitable fish and
chicken, which he will buy locally. He will
then freeze the processed food and sell it
locally. He hopes plans will go through to put
a refrigerated car on the daily train and that
will open up markets for him in Yaoundé and
Douala.



Ahadji Ybrahim Malam, chief of the fruit and
vegetable cooperative, stands with his son in the
co-op’s shop in Ngaounderé. He says they were
sad to see the road construction contractor end
its work in the area but the experience of working
with the contractor left a legacy of expertise that
helps them achieve profitable sales to the public.
The co-op members gained increased efficiency,
learned packing methods to preserve food, and
acquired techniques that increased crop yields.
Also, thanks to the seeds they received from the
contractor in the early days, they can offer
unusual produce for their area that commands a
good price. Perhaps most important, he says,
they have kept their village school going for two
years now, and it is a great success.




                                                      70
                                                            Local Business Development



Chad Local
Businesses




             Issa Doubgous, the General Director of Diagnose Auto in N’Djaména, Chad
             (right), says he has funded a major expansion of his auto repair and rental
             business by gaining a contract with the Project. In addition to car repairs, his
             business also rents cars, makes license plates, and helps make arrangements
             for business and tourist travelers. The shop was created in 1982 and has
             grown to 32 employees and a rental fleet of 60 vehicles.




             The company Climat Tchad installs and repairs air conditioners for the Project,
             working in N’Djaména and in the oilfield area. Assistant Manager Dimanche
             Ongtoin (left picture, white shirt) reports that the company has grown from five
             to 18 employees since beginning work with the Project. He says the extra
             business made it possible for him to buy a stock of air conditioners to keep in
             the warehouse, improving his chances for making sales. His firm also
             purchased power tools and other machines that make their work more efficient
             and profitable.




                                      71
                                                               Local Business Development




                 Manager Abdelkader Badaoui operates Alif, a furniture and decorating
                 company in N’Djaména. Since founding the business six years ago, he says
                 they have grown from their initial beginnings making traffic signs and
                 billboards. They now make furniture in wood and wrought iron, and they sell
                 kitchen furniture and housing renovation services to the Project. They have
                 been able to purchase two trucks to make deliveries.

Cameroon Local
   Businesses




                 El Helou Gassan has operated the only commercial bakery in Ngaounderé for
                 13 years, and has been doing business in the country for the last 30 years. At
                 peak times he sold 3,400 loaves of bread per day to Project contractors and
                 even at low points he sells 400 per day. He says he has known all along that
                 the intensive business associated with the Project’s construction phase will
                 end, so he used the increased business to fund the purchase of some new
                 bakery machinery. He also now has enough money to open a new retail shop
                 at the train station. His business currently employs 45 people.




                                         72
                                                Local Business Development




Entrepreneur Jacques Fopit operates a five hectare farm with eight employees
in the Gbengboy area, near Pump Station 2. Fopit says he began his business
by selling vegetables to Project contractors. Now, however, he has converted
to what he calls the “civilian” economy, selling to weekly markets in the villages
around the pump station area.




The construction contractor for the pump stations in Cameroon has created a
village-based business initiative for residents in the Dompta area. Rocks were
needed to line the drainage ditches at the Pump Station 2 facility. The
contractor’s socioeconomic coordinator recruited residents of local villages, in
this case the village of Djackone, to gather the needed rocks. Over 250
truckloads of rocks have been purchased, with the proceeds being shared
within each village. Village residents also picked up jobs setting the stones in
the ditches because they had gained masonry skills from their work when the
Project’s road construction contractor was active in the area.




                         73
                                                                                                 Local Business Development



                                Annual Summary: Local Business Development
                                Since construction started, the Project has purchased over 345 billion
                                FCFA ($531 million) in goods and services from Chadian and
                                Cameroonian businesses. However, as anticipated in the Environmental
                                Assessment, Project construction has entered its final phases and the
                                rate of spending with local businesses has started to decline. Total
                                expenditures in the fourth quarter were down by about 10% compared
                                to the previous quarter.
                                • In Chad, Project spending with local businesses dropped by 17% this
                                      quarter to 27.2 billion FCFA ($42 million).
                                • In Cameroon, Project spending with local businesses dropped by 3%
                                      this quarter to 31.6 billion FCFA ($48 million).

                                3 Project Spending with Local Businesses
                                                                                  % Change
          1st Qtr 2002      2nd Qtr 2002      3rd Qtr 2002      4th Qtr 2002      Qtrs 3 to 4 Project to Date
Chad     24.6 billion FCFA 27.5 billion FCFA 33.0 billion FCFA 27.2 billion FCFA        -17% 150.8 billion FCFA
            ($37.8 million)   ($42.3 million)   ($50.6 million)   ($41.8 million)               ($231.8 million)
Cameroon 28.1 billion FCFA 32.6 billion FCFA 32.6 billion FCFA 31.6 billion FCFA         -3% 194.7 billion FCFA
            ($43.2 million)   ($50.2 million)   ($50.2 million)   ($48.6 million)               ($299.6 million)
Project       52.7 billion FCFA 60.1 billion FCFA 65.6 billion FCFA 58.8 billion FCFA                                -10% 345.5 billion FCFA
Total            ($81.0 million)   ($92.6 million)  ($100.8 million)   ($90.4 million)                                       ($531.4 million)
  This table was prepared using the latest available data. Data for previous quarters has been updated to include late reported data.


  Project Activity
   Drives Project               3 Total Project Spending with Local Businesses Compared to
      Spending in                     Project Activity (Indicated by Total Project Workers on the Job)
  Local Economy                                                                                                          12,701
                                                                                                 12,474                  Workers
                                                                         11,757
                                                         10,948


                                                                                                  65.6
                                                                                                                          58.8
                                     FCFA in Billions




                                                                          60.1
                                                         52.7




                                                        1Q2002           2Q2002                 3Q2002                  4Q2002



                                                                   74
                                                                        Local Business Development




      Project                  The pace of economic growth in Chad (as measured by Gross Domestic
Expenditures                   Product) has been driven sharply upward since Project construction
  Drive Chad                   began in late 2000 - from only 1% to almost 11% annually. As shown
   Economic                    here, the rise in the Gross Domestic Product tracks closely with the
      Growth                   Project’s purchasing of goods and services from Chadian businesses.
                               Project payment of worker wages - a total of 28.1 billion FCFA ($43.2
                               million) in Chad in 2002 - has also had a positive impact on the
                               economy of the country.

                               3 Chad Annual GDPGrowth (%) vs. Project Spending (in millions
                                  of US dollars)
                                                                                          10.8%
                                                                                        GDP Growth

                                                                         9%
       Project Spending with
         Local Businesses




                                                                                          $173M




                                  1%                 1%                 $57M

                                 $10M               $10M

                                 1999                2000               2001               2002




                                                    75
     Local Business Development




76
                                                              Section



                                                          10
Training
D     uring 2002, the Project conducted approximately 7,600 training
      sessions with class attendance of over 46,000. (Most workers
receive several levels and types of training, thus the attendance figure is
higher than the total number of Project workers.)
The Project’s training programs cover an array of categories including
new worker safety, health, environment, and orientation sessions;
classes in construction trade crafts; and high level skills training for
trades such as carpentry and electrical work. In addition to classroom
training, the Project’s contractors conduct extensive on-the-job training,
which is not tracked because its informal nature does not lend itself to
statistical tabulation.




New workers, like the ones in this group at Dompta, Cameroon, receive a ten
hour basic course covering the Project’s safety, environmental, and health
requirements.



                        77
                                                                                 Training



 Equipment    As construction enters its final phases, hiring has slowed and most
Donation to   classroom-based skills training for Project workers has been completed.
   Chadian    For this reason, facilities contractor TCC has ended its formal classroom
  Technical   training effort at six Chadian technical schools and plans to donate
   Schools    some surplus training equipment to the schools.
              TCC chose the six schools two years ago to conduct its local skills
              training program, electing to build up the capabilities of these existing
              Chadian technical schools rather than create new facilities. As part of
              this capacity building initiative, the Project imported an array of
              equipment to be used in the training program, including items such as
              welding machines, power tools, and vehicle repair equipment.
              Negotiations are underway to allow for the donation of the imported
              equipment to the six schools.




              This archive photo shows some of the welding equipment that the Project
              purchased for the Chadian technical schools. Negotiations are underway with
              government officials to allow the schools to keep the Project-purchased
              equipment.

              Qualified graduates of the Project’s classroom-based technical skills
              training program have now advanced to on-the-job training. And, since
              it can be very difficult in Chad to get a skilled job position without
              written proof of experience, the graduates are being given objective
              skills testing and a written dossier of their skills. This documentation


                                     78
                                                                                 Training



              will help them compete for jobs after their Project construction
              employment has come to an end.
  Training    All new Project workers who will be on the job for more than two weeks
Tabulation    receive ten hours of training on safety, health, and the environment
              (SHE), and they are also informed about the Project’s policies regarding
              alcohol, drugs, firearms, hunting, poaching, and bush meat. In addition,
              many workers receive additional craft and skills training suitable to
              their assignments.

              Annual Summary: Training

              3 Contractor Training Levels for 2002 - Number of Sessions
                                 1st Qtr   2nd Qtr   3rd Qtr     4th Qtr     Total
                                  2002      2002      2002        2002     Sessions
   Cameroon
    New Hire SHE & Orientation       412      459        430         315         1,616
    Basic Craft                       84       81         73          49           287
    High Skills                      221      286        377         318         1,202
   Chad
    New Hire SHE & Orientation       196      227         287        270           980
    Basic Craft                      166      147         227        369           909
    High Skills                      218      826       1,095        498         2,637


              3 Contractor Training Levels for 2002 - Number of Attendees
                                 1st Qtr   2nd Qtr   3rd Qtr     4th Qtr     Total
                                  2002      2002      2002        2002     Sessions
   Cameroon
    New Hire SHE & Orientation     3,172     4,033      4,024      3,250     14,479
    Basic Craft                      786       963        910        584      3,243
    High Skills                    1,313     1,932      2,914      2,083      8,242
   Chad
    New Hire SHE & Orientation     1,317     1,742      1,722      1,825         6,606
    Basic Craft                      948     1,732      2,284      2,268         7,232
    High Skills                    1,334     1,816      1,030      2,088         6,268




                                      79
                                                                                                              Training




                                  3 Skills Training of Chadian & Cameroonian Workers
                                     vs. Construction Activity (as indicated by employment level)

                                                                                             9,643 National
                                                                                                Workers


                                                                                                 4,171
                                                                                               Attendees
Skills Training Levels




                                                                                    3,944
                                                                            3,748


                                                     2,822
                                                                  2,647




                                            766

                           58       146

                         1Q2001    2Q001   3Q2001   4Q2001        1Q2002   2Q2002   3Q2002      4Q2002




                                                             80
                                                            Section



                                                         11
Archaeology
& Cultural Resources

A    rchaeological investigations in Chad and Cameroon began to shift
     from the field to the laboratory this quarter. Since much of the
Project’s construction excavation work has been completed, the
archaeological teams are not needed as much in the field for monitoring
duties. Therefore, they have begun to turn their attention to the study
and analysis of discovered artifacts.
In response to this shift in the nature of the work, new archaeological
laboratory facilities are being arranged in both countries.
• The Cameroon team moved its collected samples into a new
   laboratory facility in rented space in Douala.
• In Chad, the Project has signed a contract with the University of
   N’Djaména to create a new archaeology laboratory and curation
   facility. The building is under construction.


Annual Summary: Archaeology
Since investigations began, the Project’s Chadian and Cameroonian
archaeology teams have recorded 514 sites of interest. The
archaeological sites range widely in age, from stone age, to iron age, to
Neolithic.
• Of the 350 sites found in Cameroon, 38 have been classified as being
   high priority and 50 have been designated as medium priority.
• The 164 sites discovered in Chad include 17 high priority and 31
   medium priority locations.
Taken as a whole, the Project’s archaeological surveys and monitoring
effort are the largest archaeological program ever undertaken in Central
Africa.



                       81
                                          Archaeology & Cultural Resources



All archaeological material collected by Project scientists belongs to the
people of Chad and Cameroon. The material will be handed over to the
respective government ministries at Project completion.




The field kits of the Project’s Chadian archaeology team were upgraded in the
fourth quarter. For example, the kits now include satellite-based Global
Positioning System units to precisely record artifact site locations. The kits also
include digital cameras and packaging materials to ensure proper specimen
collection and preservation. This site, in the far south of Chad, was identified
during the monitoring of pipeline trenching, and it was specially marked so that
the archaeology team could perform an excavation before any further
construction activity occurred. Investigations revealed that the site, a Neolithic
fire pit, dates back 4,500 to 7,000 years.




                          82
                                                                            Training
                                                                     Section



                                                                  12
Worker Health

P   roject clinics provided 23,410 worker medical consultations during
    the fourth quarter of 2002, about half of them in Chad and half in
Cameroon. A major focus of the Project’s worker health program
continues to be malaria control.




A new larger Project worker clinic has been opened to serve the construction
workforce at the central oilfield facility. The clinic will provide medical care until
the Project’s permanent clinic is constructed at the main residents’ camp.




                           83
                                                              Worker Health




At the facilities contractor's camp at Komé Base, a new restaurant was
commissioned in the fourth quarter. Thanks to the opening of this new dining
hall, kitchen and dining space has been doubled, new food preparation areas
have been created, and several improvements to enhance food safety have
been implemented.




The Project launched a campaign this quarter to improve the first aid
capabilities in its field workforce. Individuals who have received "first
responder" training have green crosses on their helmets, making it easy for
their fellow workers to identify them if they need help.




                        84
                                                                                  Worker Health




Employees and their families from the main COTCO office in Douala attended
a December educational event on the prevention of sexually transmitted
diseases and HIV/AIDS. The event included a presentation, a question and
answer session, and the distribution of literature designed for all family
members.

Annual Summary: Worker Health

3 2002 Aggregate Worker Health Data
                                                     Number of Diagnoses
                                                                                         Cumulative
                               1Q2002         2Q2002        3Q2002         4Q2002        Total 2002
 Chad
   STDs                              100           106             82           124                412
   SSS* Events                       103            52             26             6                187
    (excluding Malaria &
    STDs)
   Hospitalizations                     0             5              3             3                11
   Medevacs                             1            10              3             3                17
 Cameroon
    STDs                             401           309            272           317             1,299
    SSS* Events                      133           180            100           119                532
    (excluding Malaria &
    STDs)
    Hospitalizations                  29             31            40             26               126
    Medevacs                           2              5             5              7                19
*SSS: Early warning system used to identify changes in disease rates. Some examples of diseases covered
by the SSS include gastrointestinal, dermal and respiratory diseases.


                                85
                                                                                Worker Health



Tracking Malaria   As part of its comprehensive Malaria Control Program, the Project
       in Worker   carefully tracks malaria cases among its workers. The tracking system
    Populations    divides the worker population into two categories - non-immune and
                   semi-immune.
                   Semi-immune workers are those individuals who were born in and
                   have grown up in the Project area. Over their lifetime, they have been
                   repeatedly exposed to the malaria parasite and have developed a degree
                   of immunity to the disease. Taking anti-malaria medication could
                   damage this natural protection. Therefore, for semi-immune workers,
                   the objective of the Malaria Control Program is to limit the seriousness
                   of their malaria cases, Tracking of malaria in the semi-immune
                   workforce therefore focuses on those cases requiring hospitalization.
                   Non-immune workers are those individuals who come from outside
                   Sub-Saharan Africa (excluding South Africa). These individuals can
                   gain benefit from taking effective anti-malaria medication and they are
                   required to do so under the Project’s Malaria Control Program.
                   Therefore, for non-immune workers, the objective is the outright
                   prevention of malaria cases. Thus, the Project tracks all cases of malaria
                   in the non-immune worker population.
                   Malaria case statistics tend to rise and fall depending on the season. The
                   malaria parasite is spread by mosquitoes, and the annual rainy season
                   produces countless pools of water, which are the ideal breeding habitat
                   for mosquitoes. As a result, the mosquito population explodes during
                   the rainy season, thereby triggering a significant increase in an
                   individual’s risk of being bitten by a parasite-carrying mosquito. The
                   rainy season months vary in the Project area but generally center on the
                   third quarter of the year.

                   3 Non-Immune Population (all cases)

                                          1Q2002         2Q2002        3Q2002        4Q2002
                    Chad                     0              4             45           31
                    Cameroon                15              30            68           41

                    Project Total           15              34           113           72
                    % of Total Non-
                    Immune Workforce
                                           0.4%           0.8%           2%           0.7%




                                          86
                                                                            Worker Health




                  3 Semi-Immune Population (serious cases)

                                       1Q2002         2Q2002       3Q2002        4Q2002
                   Chad                   0             0             0             0
                   Cameroon               28            22            26           38

                   Project Total          28            22            26           38
                   % of Total Semi-
                   Immune Workforce      0.1%          0.1%          0.1%         0.1%


                  In addition to these data tables and the events described above for the
                  fourth quarter, the following key developments took place in the first
                  three quarters of 2002.

  First Quarter   • A series of action plans were prepared and implemented by the
          2002       Project’s prime contractors to address the findings of an independent
                     health and sanitation assessment. The plans addressed such areas as
                     catering, camp sanitation, and the medical preparation of expatriates
                     before their arrival in Africa.

Second Quarter    • An investigation determined that two Project contractor workers
         2002        who died from malaria had not been taking their anti-malaria
                     medication. In response to this tragedy, the Project developed an
                     enhancement to its Malaria Control Program, aimed at ensuring the
                     proper use of effective anti-malaria medication by non-immune
                     workers.
                  • An STD/HIV/AIDS education and prevention campaign targeted at
                     Project truck drivers was launched at the main storage yards located
                     in Douala and at the rail head in Ngaoundal.

 Third Quarter    • The Project’s Malaria Chemoprophylaxis Compliance Program for
         2002        non-immune workers went into effect. The program features
                     intensive re-education and counseling, backed up by random testing
                     for compliance with the Project’s requirement for taking effective
                     anti-malaria medication.




                                         87
                                                                Worker Health




This group of newly arrived workers is receiving the mandatory malaria
briefing. The briefing includes information on the particularly dangerous form of
malaria found in the Project area (Falciparum malaria), and the Project’s
policies regarding the use of effective anti-malaria medication by non-immune
individuals. The briefing also stresses the prevention of mosquito bites as a
first line of defense against malaria.




Major scientific advances were announced in October that promise hope for
better control of malaria. The discoveries have particular significance for the
Project because a vector control specialist stationed at Komé, Dr. Madama
Bouaré, is a co-author of one of the studies. The article Genetic Loci Affecting
Resistance to Human Malaria Parasites in a West African Mosquito Vector
was published in the journal Science. Both Science and Nature published
special issues in October focusing on research into the mapping of the genetic
makeup of the malaria parasite and the mosquito that spreads it. This genetic
knowledge could lead scientists to discover new ways to combat the disease.
Findings from other malaria research programs partially funded by ExxonMobil
were also published in the two special issues.

                         88
                                                                       Section



                                                                    13
            Community Health

            M     alaria and STDs/HIV/AIDS prevention continue to be the
                  primary focus of the Project’s Community Health Outreach
            Program.
Roll Back   The initial phase of the Roll Back Malaria program in Chad has been
  Malaria   completed with the final distribution of anti-mosquito bed nets. By the
            end of 2002, the two NGOs contracted by the Project to implement
            much of the program had:
            • Distributed over 37,000 bed nets to Project area villages.
            • Conducted 370 malaria education programs in 141 villages, reaching
               122,000 residents in the Oilfield Development Area and along the
               Project-upgraded road.




            Two Project-commissioned NGOs (ACODE and AMASOT) distributed over
            37,000 mosquito bed nets in 141 villages.



                                  89
                                                                           Community Health



HIV/AIDS & STDs    A year long, multi-village STDs/HIV/AIDS prevention and education
                   program was completed in Cameroon in the fourth quarter of 2002.
                   Sessions were held in Nanga Eboko, Batchenga, Ngoumou, and
                   Dompta. (The program was in addition to the STDs/HIV/AIDS
                   awareness program targeting the Project’s truck drivers in Douala and
                   Ngaoundal.) The Cameroonian NGOs LLEFE, CRAGERNA, and
                   CAMNAFAW were contracted by the Project to conduct various
                   portions of this village education effort.




                   STDs/HIV/AIDS prevention and education programs like this one have been
                   conducted in Cameroonian villages, with support from the Project’s Community
                   Health Outreach Program.


                   Annual Summary: Community Health
                   In addition to the events described above for the fourth quarter, the
                   following key developments took place in the first three quarters of
                   2002.
   First Quarter   • Field work began on the Roll Back Malaria program in Chad,
           2002       including village education sessions and the distribution of anti-
                      mosquito bed nets.

 Second Quarter    • In Chad, the two NGOs implementing the Roll Back Malaria
          2002        initiative, AMASOT and ACODE, had so far conducted malaria
                      education and bed net distribution programs in 87 villages.
                   • In Cameroon, 35,000 anti-mosquito bed nets were ordered for the
                      Roll Back Malaria program, and a Cameroonian NGO was chosen to
                      distribute the nets.




                                          90
                                                                           Community Health



                • The theatrical group Les Benjamin began touring the villages of
                   southern Chad with a unique drama-based approach to HIV/AIDS
                   education.

Third Quarter   • The Project agreed to provide start-up support for an interim
        2002       government clinic to serve the communities in the vicinity of Pump
                   Station 2.




                A government nurse examines a patient at the Project-supported clinic set up
                in mid-2002 in Gbengboy, near Pump Station 2 in the highlands of
                northeastern Cameroon. The government is providing staffing for the clinic,
                and the Project has provided a rented temporary location, examination room
                furniture, basic start-up medical supplies, and electricity. The clinic replaces
                the good Samaritan health care that had been provided by the Project's road
                construction contractor at its camp, which was shut down following the
                contractor's demobilization from the area. Eventually, the government plans to
                build a permanent clinic in the area.




                                         91
     Community Health




92
                                                                            Section



                                                                         14
              Waste Management

              T   he Project reduced its hazardous waste backlog by half this quarter,
                  primarily due to the success of a program to recycle used
              lubricating oil in Cameroon. Over the course of the year, over 40% of the
              Project’s non-hazardous waste was recycled to villages or sent to
              approved recycling facilities.




              A team of waste management experts contracted by the Project is working
              with this new hazardous waste incineration company in Douala. The COTCO
              team has been helping the management and technical staff of the company to
              bring its operations up to ExxonMobil standards. Once this has been achieved,
              the company will be contracted to dispose of hazardous waste generated by
              the Project in Cameroon.

Permanent     Some of the Project’s permanent waste management facilities have come
 Facilities   on line, and construction has commenced on the Project’s two
              engineered solid waste landfills.
              • Construction began on the Komé waste management facility, which
                 will include engineered hazardous and non-hazardous solid waste



                                      93
                                                         Waste Management



   landfills, a hazardous waste-capable incinerator, two domestic waste
   incinerators, and a waste storage building.
• The hazardous solid waste landfill at Pump Station 3 near Bélabo
   has been excavated and the liner system installed, with various
   supporting infrastructure elements to be added to allow the facility
   to go into operation in 2003.
• The permanent waste storage facilities at the two Cameroon pump
   stations and the Pressure Reducing Station were completed.




The Komé Waste Management Team, formed in the third quarter, has
assembled an array of equipment at the Oilfield Development Area’s
temporary central waste management facility. This facility will help manage
Komé area waste as efficiently as possible until the permanent waste
management facility can be commissioned. The equipment at the temporary
facility includes domestic waste incinerators, a filter crusher, a rag baler,
shredders for plastic and metal bottles and cans, and a glass crusher.




                         94
                                                                                                 Waste Management




                  Construction of the Komé permanent waste management facility began in the
                  fourth quarter.

                  Annual Summary: Waste Management
  Storage of      At the end of 2002, the Project had approximately 270,000 kilograms of
  Hazardous       hazardous waste in storage, about half the quantity that was in storage
      Waste       at the end of the third quarter. This substantial reduction has been
                  achieved largely through the successful implementation of a used
                  lubricating oil recycling program in Cameroon. The Cameroonian
                  company BOCAM, in partnership with Mobil Oil Cameroun, collects
                  used oil from Project work sites. BOCAM processes the oil at a facility in
                  Douala and sells the treated oil to a nearby cement kiln for use as a fuel.
                  Until the permanent waste management facilities have been
                  constructed, the Project will continue to store its non-recyclable
                  hazardous wastes in safe, leakproof containers. The bulk of the waste
                  that has technically been classified as hazardous and is in storage
                  consists of commonplace materials such as used lubricating oils,
                  hydrocarbon-contaminated soil, lubricating oil filters from vehicles and
                  construction equipment, and batteries.
     Waste
Management        3 Non-Hazardous Waste Tabulation (Kilograms)
  Statistics                                 1st Qtr          2nd Qtr           3rd Qtr           4th Qtr
                                                                                                                    Total
                                              2002             2002              2002              2002
         Domestic Garbage                    246,112           346,184           485,135           500,935        1,578,366
         Incinerated On Site
         Innocuous Solid Waste                342,040          315,164           339,043        1,677,088         2,673,335
         Buried on Site
         Recycled to Local                    362,617          954,444           798,537           751,702        2,867,300
         Communities
         Sent to Approved Third                44,287            20,457            36,561           40,222          141,527
         Party Facilities
         Total                                995,056        1,636,249         1,659,276        2,969,947         7,260,528
        Weight estimates in this table are based on defined waste-specific weight standards for individual types of containers.




                                                    95
     Waste Management




96
                                                                               Section



                                                                            15
                   Water Quality Monitoring

                   A     system of specialized groundwater monitoring wells has been
                         installed in the Oilfield Development Area, significantly
                   enhancing the Project’s ability to monitor groundwater water levels and
                   quality in the region. The last two years of water withdrawal and
                   groundwater level monitoring data shows that the Project’s water use
                   has not adversely impacted the availability of the water resources
                   utilized by the local population. To date, the Project’s water quality
                   monitoring program has not detected any Project-related water
                   contamination.
           New     During the fourth quarter of 2002, the Project installed 35 specialized
   Groundwater     groundwater monitoring wells (called piezometers) at strategic
Monitoring Wells   locations in and around the three oilfields in southern Chad.
                   • 19 wells in the Komé field area.
                   • 9 wells in the Miandoum field area.
                   • 7 wells in the Bolobo field area.
                   The wells have been drilled to depths of 17 to 52 meters with most being
                   in the 20 to 25 meter range. These wells, an enhancement to the Project’s
                   existing water source monitoring program, allow environmental
                   monitors to better measure the level of the water table in the area. These
                   new special purpose monitoring wells also allow for the periodic taking
                   of subsurface water samples, which will be tested to track groundwater
                   quality.
                   Information obtained from the newly installed monitoring wells has
                   already improved the Project’s understanding of groundwater flow
                   patterns in the region and, based on the new data, groundwater contour
                   maps for the area have been updated.
                   The Project also decided this quarter to enhance its water monitoring
                   capabilities in Cameroon. A limited number of groundwater monitoring
                   wells will be installed at Pump Stations 2 and 3, and at the Pressure


                                          97
                                                                  Water Quality Monitoring



                Reducing Station. Although the wells are not explicitly required by the
                Project’s Water Monitoring Program, their installations will improve the
                Project’s ability to monitor groundwater in the vicinity of these sites and
                help ensure the protection of local residents’ water sources.




                An EMP monitor uses a special tool called a “bailer” to take a sample from one
                of the groundwater monitoring wells in the Oilfield Development Area.

2002 Ongoing    In addition to its own groundwater monitoring wells, the Project also
Local Source    monitors the surface waters and wells used by local residents. Baseline
   Monitoring   data is collected before beginning work in an area, and before beginning
                water withdrawals. Local water source monitoring then continues
                during the work or water withdrawal period, using the initial baseline
                information to detect any adverse Project impacts. No such impacts
                have been detected so far at any of the Project’s work sites or water
                withdrawal points.
                Exceeding the Monitoring Requirement
                In its environmental documentation, the Project committed to
                monitoring locally used water sources within one kilometer of a Project
                worksite or water withdrawal location. However, at many locations in
                Chad and Cameroon, the Project has extended its monitoring beyond



                                        98
                                               Water Quality Monitoring



the one kilometer boundary and monitors water sources as much as
three or more kilometers away. For example, in the Oilfield
Development Area, 26 of the 30 community water wells monitored in
2002 are outside the standard one kilometer boundary.
The Project decided this quarter to increase the frequency of
groundwater level measurements in the monitored village water wells
from quarterly (as originally required by the Water Monitoring
Program) to monthly. The increased amount of data has made it
possible to better understand seasonal groundwater level fluctuations in
Chad and Cameroon and thus make certain that Project activities and
water withdrawals are not adversely impacting water supplies used by
local inhabitants.
No Quantity or Quality Impact Found
Data gathered by the Project during 2002 consistently showed that
groundwater withdrawals by the Project have not led to lower water
levels in nearby village water wells. The fluctuations seen in village
wells are well within normal variations caused by the alternating rainy
and dry season patterns in the Project area.
During 2002, more than a dozen village water wells were sampled and
analyzed for quality, looking for any evidence of Project-related
contamination. Chemical analyses of the samples showed that some of
the village wells did not meet the water quality guidelines of the World
Health Organization (WHO) for certain parameters. However, this
condition was detected during baseline testing and pre-dated Project
construction activity, as noted in the Environmental Assessment. Water
quality monitoring to date has not detected any project-related
contamination.




                      99
      Water Quality Monitoring




100
                                                             Section



                                                          16
Environmental Foundation

T   he Management Board of the Foundation for Environment and
    Development in Cameroon (FEDEC) met in December to review
progress to date and craft a future action plan and strategic vision. (For
more information on the Foundation’s progress in 2002, see the Annual
Review for this topic.)
The vision adopted by the Board for the next year includes six main
elements.
Defining the Organization: The Foundation must be a strong and
credible partner, taking into account the existence of other similar
organizations.
Developing a Strategic Plan for Funding: Future planning should include
the importance of seeking additional financial and professional support,
the need for crafting a five year strategy for seeking additional funds,
and the positioning of the Foundation to take advantage of donations
arising out of the end of construction of the Project.
Setting Up Intervention and Coordination: This action would include the
promotion of a workshop to explore the Foundation’s long term
strategy towards the Bagyeli/Bakola, and the Foundation’s
participation in a development plan for the communities in the Campo-
Ma’an area.
Arranging for Infrastructure and Facilities: The Foundation must keep in
mind that logistical support provided by COTCO will soon end and that
the Foundation should expedite requests for needed equipment from
COTCO and its contractors.
Developing the Team: The Foundation should continue to maintain a
limited staff, and judiciously use consultants for specific tasks.
Gaining Visibility and Reputation: The Foundation should continue to
enhance its communications plan.




                       101
                                                                Environmental Foundation



                  Annual Summary: Environmental Foundation
                  In addition to the events described above for the fourth quarter, the
                  following key developments took place in the first three quarters of
                  2002.

  First Quarter   • Contract offers were made and accepted for the positions of
          2002       Foundation Administrator and Community Development Facilitator.
                  • A Swiss banking firm was selected as the Foundation’s Fund
                     Investment Manager. The company will invest and manage the
                     Foundation’s endowment.

Second Quarter    • The Management Board chose the Wildlife Conservation Society as
         2002        the Implementing Organization to undertake the Foundation’s work
                     in the new M’bam and Djerem National Park.
                  • The first four Indigenous Peoples Program initiatives were approved
                     and funded by the Foundation’s Management Board.
                     -   Helping Bagyeli/Bakola people in the Project area get national
                         identity cards.
                     -   Providing medical diagnoses for tuberculosis, other respiratory
                         diseases, and hernias.
                     -   Supplying some child and adult education programs with books
                         and educational supplies.
                     -   Improving Bagyeli/Bakola agricultural practices and crop yields.

 Third Quarter    • The Management Board chose the World Wildlife Fund - Cameroon
         2002        (WWF) as the Implementing Organization to perform the
                     Foundation’s environmental conservation work in the new Campo-
                     Ma'an National Park.
                  • Ceremonies at a Bagyeli/Bakola settlement commemorated the
                     formal beginning of the Indigenous Peoples Program.




                                        102
                                                              Section



                                                           17
Transition to Oil Production
Phase

A    s construction progresses towards the first oil production
     milestone in mid-2003, work continues on building the
organization that will operate the Project over its 25 to 30 year life.
Training & Hiring
A total of 177 Chadians and Cameroonians have been hired as
permanent Project staff in technical, managerial and professional
positions, 111 in Chad and 66 in Cameroon. A limited number of
positions remain to be filled.
Technical training began almost two years ago for the first technicians
chosen as permanent staff. All of the new Chadian and Cameroonian
employees have attended orientation and English language courses.
Now, 72 of the 94 technicians are working in Canada, the United States
and other countries to gain actual job experience before coming back to
their operations jobs in Chad and Cameroon.
A multi-week training program has been developed for the expatriate
staff who will be assigned to operations phase jobs in Chad and
Cameroon. Their training begins in January 2003, and their mobilization
to Chad and Cameroon will commence in March 2003.
Offices
In N’Djaména, the permanent operations office building for the Project
has been designed and is now in the bidding process. Fifteen Chad-
based contractors initially expressed interest in the work and, after a
qualification process, four were invited to submit formal bids.
In Douala, a site for the new COTCO office building has been identified
and an architect has drawn up preliminary plans. Final commitments
concerning the office building were still pending as the year ended.




                       103
                                                                      Transition to Production




The Chadians in these classrooms have been hired for operations phase technician positions
and received their initial training in the fourth quarter. They received immersion language
training in English and basic technical instruction at the Project’s training center in N’Djaména.
At the end of 2002 they traveled to the United States for their on-the-job experience
assignments.




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