LexisNexis(TM) Email Request (1842:37405244)

                                                                         108Q6Q

Print Request: Selected Document(s): 4

Time of Request: March 23, 2005 11:34 PM EST
Number of Lines: 108
Job Number: 1842:37405244
Client ID/Project Name:

Research Information:


Note:

4 of 6 DOCUMENTS

Copyright 2004 The New York Times Company
The New York Times

February 18, 2004 Wednesday
Correction Appended
Late Edition - Final

SECTION: Section A; Column 1; Foreign Desk; Pg. 3

LENGTH: 1407 words

HEADLINE: The Making of an African Petrostate

BYLINE: By SOMINI SENGUPTA

DATELINE: NGALABA, Chad

BODY:

   As night fell and the bright lights of the brand-new oil field wrapped this
hamlet in their golden glow, Neurmbaye Elie, a local farmer, pointed across the
field before him.

    There, Mr. Elie said, just left of the blazing gas flare, under the
streetlight, once stood the village initiation site. Animals were sacrificed
there, spirits were supplicated, and the village boys became men. Then it became
part of the oil complex, fenced in, a patch of earth not unlike the rest; the
village got about $130 for it.

    Now, he worries. What if the spirits, displeased, sprang from that sacred
ground and spread willy-nilly across the land?

    Oil is bringing big changes to Chad, some cultural, like the one Mr. Elie
worries about, others practical, like the way the World Bank will be overseeing
how Chad manages its new wealth. Chad, among the poorest countries in the world,
is now Africa's newest petrostate.

    Its $3.7 billion underground pipeline, stretching 670 miles, began ferrying
crude oil through neighboring Cameroon to the Atlantic coast last year. The
pipeline is the largest single private investment in Africa.

    Because the pipeline stands to transform this landlocked country, for better
or worse, Chad is under a special glare -- from the oil industry, global lending
institutions and development groups.

    The investment has come with strings attached: the oil revenues are to be
transparent, and the government is to use the wealth to better the miserable
lives of its nine million citizens. A citizens' committee is to review all
spending to see that it conforms to the law.

    If the rules work as intended, they could set a new model for how oil
business is done in Africa. But if the usual corruption sets in, if democratic
reforms are postponed, it will be just one more case of the spectacular misery
that has befallen Africa's oil states, like Sudan, where oil greased the engines
of war, or neighboring Nigeria, where living standards plummeted since oil
production began 40 years ago.

    ''You're dealing with a government that's certainly not a model of
governance,'' said Jerome Chevallier, who oversees the pipeline here for the
World Bank, which partly financed the project. ''It's basically a high risk,
high reward project. If you can use oil to lift Chad out of its extreme poverty,
it's a win. The risks, of course we know.''

    It is the World Bank's first foray into oil development, and early missteps
since ground was broken in 2000 suggest that the risks are indeed formidable.

    When the group of oil companies offered a $25 million ''signing bonus'' four
years ago, the government spent the first chunk on arms and another refurbishing
ministers' offices. According to the oversight committee, one ministry tried to
buy rice and millet at twice the market price. Another wanted six off-road
vehicles. The oversight committee blocked many of those requests.

    ''We said, 'No, no, no guys, too much,'' recalled its chairman, Mahamat
Mustapha. [His future as chairman is unclear; President Idriss Deby's
brother-in-law was recently appointed to the committee.]

    This year, Chad will see its first share of oil royalties, about $100
million, an amount that will enlarge the government treasury by about 40
percent, virtually overnight. While this allotment will be closely watched,
another $100 million from taxes and customs duties is entirely at the government
's discretion.

    Certainly, there is no dearth of need. Electricity and water are beyond the
reach of a majority of people here, and the average Chadian can expect to die
before his 45th birthday. The per capita income barely exceeds $1,000 a year.
Chad ranks 165th of 173 countries on the United Nations Human Development Index.

    Critics say it is foolhardy to expect a leadership dominated by one ethnic
group (the president's) and with a record of repression and mismanagement to do
anything but use its new wealth to crush opponents.

    They point to worrisome signs: the banning of an antipipeline protest, the
temporary closure of an irreverent radio station, the execution of criminals
after what critics believe to be incomplete trials.

    The most recent sign of trouble was a suggestion by supporters of Mr. Deby,
a military ruler twice elected president, to amend the Constitution to allow him
to run for a third term. ''For those who lead us, the law is just a piece of
paper,'' said Dobian Assingar, head of the Chadian League of Human Rights and a
member of the oversight committee.

    The government, for its part, points out that no country has ever opened its
revenues to such scrutiny. ''I can only say: 'Wait. Wait until the revenues are
spent,' '' said Tom Erdimi, the state's liaison to the project.

    No matter how the money is spent this year, Chad is certain to have more in
its future. ExxonMobil has already found more oil, and a Canadian company,
Encana, is busy exploring north of here.

    The World Bank says the government has agreed to apply similar oversight in
the future. The government is also likely to demand a larger share of the
wealth; its current 12.5 percent in royalties is paltry compared with what is
reaped by Africa's oil giants like Angola and Nigeria.

    In Ngalaba, the farmer, Mr. Elie, remembered when the oil workers first
started drilling in the middle of his village. The noise was so loud it was
unlike anything people had heard before.

    Today, many villagers are unhappy about the payment they got for the oil
under their land. Villagers and oil company representatives deliberated for
weeks about how much the land was worth, driving up the price of each mango tree
to $1,000.

    In the end, Chadian villages affected by pipeline construction received $6.3
million in compensation, an impressive amount by the standards of this country,
but as some villagers note, a fraction of the investment made. Moreover, some
complain, the one-time cash payment and the other changes that oil ushered in
have done little to improve their lives.

    A few villagers have managed to use compensation money to put tin roofs on
their huts. Other have spent their windfall on beer.

    But Mr. Elie pointed to the generally sorry state of his community. No
school. No hospital. None of the things the villagers had hoped would come with
oil, he said.

    The oil wells sprouted in the middle of millet fields, and the social
landscape was transformed. A schoolteacher took a job as guard for an oil well.
Prostitutes and bartenders trickled in from across Central Africa. Carpenters
and tinsmiths flocked here too, looking for shipping crates and scrap metal.

    ''A poor man is always looking for work,'' Abdel Kadre Ahmat said from under
his workshop, where he makes hoes, shovels and cooking ladles from the carcass
of an air-conditioner, a patch of aluminum siding and a rusty sign. He did not
know what the materials had been used for previously, but he did not much care.
They were free and, in his hands, very useful.

    ''I just know it's their garbage,'' he said.

    ExxonMobil says that its compensation packages included schools and health
centers for the most affected villages. At the peak of construction 10,000
Chadians got temporary jobs, the company says. The country's gross domestic
product has shot up.

    The novel oversight system is a boon for oil companies. In a sense, it
exonerates them: here is how much your government is getting, the oil companies
can say to its destitute neighbors, and now it is up to the government to spend
it wisely.

    That, said Ron Royal, president of the ExxonMobil subsidiary Esso
Exploration and Production Chad Inc., has not stopped government representatives
from beseeching the oil company for more: one asked for electricity, another an
off-road vehicle. The president, a northerner, asked for a school in the north.

    Mr. Royal declined. ''What you have to get your mind around is having to say
no to people and then explain why,'' he said. ''They see we have so much. 'Why
can't you give a little?' Because there's a principle here. You've got this
responsibility. We've got this responsibility.''

    World Bank officials say the pipeline represents a singular opportunity for
Chad to become a viable state, if not a wealthy one. Mr. Chevallier, the bank's
project manager, said the people of Chad's oil country have indeed profited from
contact with the outside world. Speed limits are now enforced on the red dust
roads. Seat belts are compulsory. He called it the ''discipline of the
industrial age.''

URL: http://www.nytimes.com

CORRECTION-DATE: February 24, 2004

CORRECTION:

   Because of an editing error, an article on Wednesday about the economic
impact of a $3.7 billion underground oil pipeline in Chad misstated the per
capita income in the country. It is $220 a year, not $1,000.

   GRAPHIC: Photos: Villagers live under the constant light of a gas flare at
the ExxonMobil oil field in southern Chad. Near the flare was the village
initiation site where animals were sacrificed, spirits supplicated and boys
became men.
On a road at the ExxonMobil oil facility in Chad, Africa's newest oil-rich
state. Its first share of royalties this year will be about $100 million.
(Photographs by Jacob Silberberg/Panos, for The New York Times)Map of Chad
highlighting Ngalaba: A 670-mile pipeline carries oil from Ngalaba, Chad, to the
coast.

LOAD-DATE: February 18, 2004