Exxonmobil and the Chad–Cameroon Pipeline (a)

15 Pages Posted: 21 Oct 2008

See all articles by R. Edward Freeman

R. Edward Freeman

University of Virginia - Darden School of Business

Andrew Wicks

University of Virginia - Darden School of Business

Patricia H. Werhane

University of Virginia - Darden School of Business

Jenny Mead

University of Virginia - Darden School of Business

Abstract

This case presents the dilemma of a multinational oil and gas company, ExxonMobil, as it factors in the ethical issues related to the environment and cultural differences in deciding whether to proceed with building a pipeline in Chad and Cameroon, two of the poorest and most corrupt developing countries in West Africa. The many players in this project included the World Bank--which cofinanced the project and put restrictions into place that would hopefully prevent pipeline-related government corruption in both Chad and Cameroon--and many environmental and human rights groups that warned of potential disaster. The case also covers the environmental and social analysis of the areas that would be affected by the pipeline.

Excerpt

UVA-E-0262

Rev. Jul. 5, 2013

EXXONMOBIL AND THE CHAD–CAMEROON PIPELINE (A)

In November 1999, ExxonMobil CEO Lee Raymond faced the potential collapse of the Chad–Cameroon Petroleum Development and Pipeline Project. Both Royal Dutch/Shell (Shell) and France's TotalFinaElf (Elf), ExxonMobil's partners in the pipeline consortium, had just withdrawn, citing environmental concerns among other things, thus leaving the pipeline's future temporarily in doubt. This withdrawal delighted many environmental groups long opposed to the pipeline. A spokesperson for the Rainforest Action Network (RAN), a grassroots environmental organization and longtime pipeline opponent, said in a press release:

Based on its experience in Nigeria, Royal Dutch/Shell recognizes a bad situation when it sees one, and Elf Aquitaine will avoid becoming part of the tragedy. The human and environmental costs of proceeding with an oil pipeline that cuts through the heart of Africa's rainforest are simply too great.

In 1996, after years of economic and environmental feasibility studies of accessing oil reserves in the Central African country of Chad, a consortium of oil companies that included ExxonMobil, Shell, and Elf signed a memorandum of understanding (MOU) with the governments of Chad and neighboring Cameroon. The Chad Development Project involved, over the span of 25 to 30 years, developing oil fields in southern Chad, drilling approximately 300 wells in the Doba Basin, and building a 650-mile underground pipeline through Chad and Cameroon to transport crude oil to the coast for shipping to world markets. Cost of the project was $ 3.5 billion; expected production was one billion barrels of oil; according to World Bank estimates, the project would generate $ 2 billion in revenues for Chad, $ 500million for Cameroon, and $ 5.7 billion for ExxonMobil and its project partners.

. . .

Keywords: environment, sustainability, public relations, cultural differences, risk assessment, corporate social responsibility, business government relations, global international foreign investment operations, analysis, stakeholder management, corruption

Suggested Citation

Freeman, R. Edward and Wicks, Andrew and Werhane, Patricia H. and Mead, Jenny, Exxonmobil and the Chad–Cameroon Pipeline (a). Darden Case No. UVA-E-0262. Available at SSRN: https://ssrn.com/abstract=1278357

R. Edward Freeman (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
804-924-0935 (Phone)
804-924-6378 (Fax)

HOME PAGE: http://www.darden.virginia.edu/faculty/freeman.htm

Andrew Wicks

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/wicks.htm

Patricia H. Werhane

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States
434-924-4840 (Phone)

HOME PAGE: http://www.darden.virginia.edu/faculty/werhane.htm

Jenny Mead

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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