UPDATE ON AWARD FOR CORPORATE EXCELLENCE ENTRANT

UNCLAS SECTION 01 OF 02 NDJAMENA 000596

SIPDIS

STATE FOR AF/C
STATE FOR EEB/EPPD
STATE FOR S/USSES

E.O. 12958: N/A
TAGS: AMGT BEXP ECON EINV ELAB ETRD KSEP SENV CD
SUBJECT: UPDATE ON AWARD FOR CORPORATE EXCELLENCE ENTRANT
ESSO/CHAD

REF: STATE 125948


1. (U) This message responds to request in reftel for
current information about past-year candidates for the
Department's Corporate Excellence Award, in the case of
Embassy N'Djamena, Esso Exploration and Production, Inc.,
Chad (Esso Chad).


2. (U) A) Is the company still working in the region?
Answer: Yes.


3. (U) B) What community-based programs and corporate
social responsibility activities has Esso Chad continued or
added in the region since being selected for the ACE program?

--Good corporate citizenship: Esso Chad remains the largest
and most visible U.S. commercial presence in Chad and the
region. It continues to make significant contributions to
the financial stability and welfare of communities where its
operations are located. In 2009, it held over 460 public
consultation sessions with Chadian and Cameroonian citizens
in its oilfield development and pipeline areas. 20,000
people attended these and similar sessions during the last
two quarters of 2008 and first two quarters of 2009. Esso
Chad is pursuing major community compensation programs for
villages in its sector of operations. The consortium's land
use outreach plan represents one of the most thorough
censuses of affected populations ever undertaken by a private
firm in Africa. Survey teams have now completed a two-year
project to interview all 2600 households and map all land use
in villages most affected by drilling and pipeline projects.
All villages in the area of impact appear viable, with farm
livelihoods intact. Households most at risk due to
preexisting social factors (e.g., widowhood, population
crowding) have been "red-flagged" for intensive follow-up.
Some villages in impacted areas have chosen to receive
community compensation, which offers broad options ranging
from school construction to water well drilling and
reforestation. Individual compensation permits options such
as technical assistance with maintaining traditional
livelihoods and housing construction. Esso Chad's
compensation plans have been undertaken in consultation with
the World Bank, which prepares formal documentation.

--Exemplary employment practices: Esso Chad is one of the
most highly respected international employers in Chad and
Cameroon, and one of this Embassy's formal comparators for
compensation to locally-engaged staff. Chadians and
Cameroonians held nine of ten jobs with Esso Chad at mid-year
2009, with wages for the 12 months preceding July 2009
totaling approximately $53 million. Seventy per cent of
Chadians and Cameroonians working for Esso Chad occupy
skilled or semi-skilled positions, and 6 per cent are in
supervisory slots. Esso Chad is known for its on-the-job
training programs, including in English language training.
As workers who can function in English are at a premium here,
Esso Chad has effort much effort in providing teachers and
course materials to its workers. This will leave a legacy
from which other American companies can benefit in the
future. Esso Chad has upheld American standards in terms of
worker entitlements to wages, safety and health (see below).


--Provision for safe and healthy workforce: Esso Chad
remains a leader in the nation in insisting that all workers
be trained in safety procedures and in providing them with
protective equipment and clothing. The firm's overall safety
record remains well ahead of industry benchmarks: its
drilling operation maintains a record of no lost time since
drilling began in 2000 (24.6 million work hours without a
major on-the-job accident). In mid-2009, following two
accidents resulting in four lost-time injuries in
non-drilling sectors, the firm's safety advisers launched an
OSHA-based enhanced accident prevention program. Esso Chad
provides free health care for its employees at project
clinics, a valued job benefit in both Chad and Cameroon,
where rural health services are uniformly rudimentary.
Project clinics provided 28,200 health care visits to workers
in the four quarters preceding July 2009, the bulk of these
involving health conditions unrelated to employment. Esso
Chad has devoted considerable attention to malaria reduction
among its workforce, with the malaria incidence rate per
200,000 workers dropping from 12 to 0.3 between 2002 and

2009.

--Responsible environmental protection and practices: Esso
Chad's environmental protection performance, always strong,
has improved significantly over the past five years, with the
monthly average for non-compliance situations dropping from 4
per cent in 2005 to 0.7 per cent in the first half of 2009.
(Definitions of non-compliance situations follow OSHA
standards.) This year, the firm has undertaken major
spill-prevention projects along the length of its pipeline
route from Chad's Doba oil fields in the southwest, through
portions of Cameroon, to its marine terminal south of Douala
in the Gulf of Guinea. The 17 major locations where the
Chad-Cameroon pipelines crosses rivers received their first
five-year inspection this year; preventative retrofits are
under way for nine high-priority valve locations following a
small spill in 2008. Esso Chad's new drilling projects -- 90
new wells in 2009 -- have been undertaken in a manner
designed to minimize land use impact.

--Contribution to overall growth and development of the local
economy: In 2009, the Esso Chad consortium will expend
roughly $1 billion, which includes $600 million in new
capital investments and $400 million in operating costs, to
continue oil exploration and production operations in Chad,
whose total GDP is currently estimated to be around $16
billion. Esso Chad spends approximately $231 million for
goods and services purchased on the local economy yearly.
Esso is responsible for 60 per cent of Chad's oil output; oil
revenues account for approximately 70 per cent of the
nation's overall yearly income.

--Innovative programs with measurable results: As provided
in Chad's national laws governing management of oil revenues,
five per cent of oil-related income must be dedicated to
projects in the oil-producing region. These funds are
maintained by a Chadian national body known as the Comite
provisoire de gestion de revenues petroliers affectes a la
region productrice. Beginning in 2008, the Comite began a
microcredit small business program, which has made loans to
more than 400 local cooperatives with 6300 members.

--Contributions to local science and technology: In addition
to investing in physical infrastructure projects such as
construction of schools, Esso Chad has provided many schools
in its area of operations with computers, and has inaugurated
vouchering programs for gifted students. It has also
sponsored Chad's first Master's Degree program for engineers.


--Compliance with U.S., international, and local laws: Based
on Chadian law, Esso Chad pays royalties of between 12 and 15
per cent to the GoC on gross sales revenue from crude oil.
Beginning in 2006, it has also paid income tax on net
profits, as well as permit fees, duties, employee taxes, fees
for work permits, etc. Corporate income tax payments afford
the GoC a major and needed revenue stream, considering the
country's extreme poverty. Embassy knows of no instances of
Esso Chad's failure to comply with U.S. or international law.
It adheres to OSHA guidelines for occupational safety and
health benchmarks, despite that these are far from prevailing
standards in Chad or Cameroon. Esso staff have been very
supportive of the U.S. Embassy as a mission, and have
collaborated closely with us on such matters as real estate
exchanges.


4. (U) C) In-country contact information for Esso Chad:

Stephane de Mahieu, General Manager.
Esso Exploration and Production Chad, Inc.
Rue de Bordeaux.
P.O. Box 694.
N'Djamena, Chad.
Telephone: 235 252-5064.


5. (U) Minimize considered.


NIGRO