CNPC begins construction of Chad oil pipeline

China National Petroleum Corp. (CNPC) has begun construction in Chad of a 300-km oil pipeline that will transport crude from Koudalwa field to the Djarmaya refinery, north of N'Djamena.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, July 2 -- China National Petroleum Corp. (CNPC) has begun construction in Chad of a 300-km oil pipeline that will transport crude from Koudalwa field to the Djarmaya refinery, north of N'Djamena.

"Chadians have waited a long time for this opportunity," said President Idriss Deby Itno, adding his hopes that oil resources can "contribute to economic development and the battle against poverty in our country."

Neither the cost nor the capacity of the pipeline, which is slated to come online in 2013, were disclosed. But Deby’s office said the southwestern Chari-Baguirmi region, where Koudala field is located, will eventually produce 60,000 b/d of oil.

In April, CNPC’s unit in Chad made its first oil and gas discovery with an exploration well that had output in excess of 1,000 tonnes of oil equivalent.

CNPC said the Prosopis-1 well produced 7,558 b/d of crude and 46,000 cu m/day of natural gas during testing, marking the highest-yielding well on Chad's H Block since the Chinese firm acquired a 100% stake there in early 2007.

CNPC also said the discovery laid a foundation for the “smooth progress” of the joint venture refinery now being built about 40 km north of N'Djamena, which is designed to produce around 700,000 tonnes/year of gasoline and diesel, 20,000 tpy of kerosine, and 60,000 tpy of LPG.

CNPC began construction of the 1 million tpy-crude capacity refinery in October. The facility is expected to become operational in 2011.

CNPC owns a 60% stake in the refinery, which aims to supply both the domestic market and neighboring countries, while Chad's state oil company SHT owns the remaining 40%.

In February, Saudi-based Islamic Development Bank (IDB) said it would consider helping finance the N'Djamena refinery. "The two parties agreed…to examine the details of the project and the possibility of a financial contribution from the bank," IDB said.

The statement came after Chad's Economy and Planning Minister Ousmane Matar Breme asked Ahmed Mohammed Ali, the head of the 56-member IDB, to "contribute to the construction of a…refinery in the capital N'Djamena which will be jointly-developed by…Chad and China."

CNPC purchased assets in Chad from EnCana in January 2007 for $202.5 million, acquiring EnCana's 50% interest in seven sedimentary basins across 54 million acres of the Block H concession.

In 2007, China National Oil & Gas Exploration & Development Corp. (CNODC) began producing oil from wells in the Mimosa and Ronier fields of the Bongor basin, one of the seven acquired from EnCana, which has proven deposits estimated at more than 100 million tonnes of oil.

Recent reports suggest that CNODC may also acquire previously unexplored areas of Chad’s oil fields relinquished by members of a consortium comprised of Chevron Texaco 25%, Esso E&P Chad 40%, and Petronas 35%, including Moundouli, Maikeri, Miandoum, Kome, and Bolobo.

Oil production in Chad began when the consortium brought Miandoum on stream in July 2003. Kome and Bolobo production followed in 2004. Satellite fields Nya, Moundouli, and Maikeri went into production in 2005, 2006, and 2007, respectively (OGJ Online, July 27, 2008).

Contact Eric Watkins at hippalus@yahoo.com.

More in Pipelines