By Ali Idrissou-Toure
COTONOU, Oct 15 1999 (IPS)

The West African state of Benin has just concluded a joint contract to resume oil production after nearly a year’s hiatus.

The 44.5-million-dollar contract, approximately 27 billion CFA francs, was signed with the multinational Zetah Oil Company. It is estimated that approximately 22 million barrels worth of oil remain hidden underground in Seme, a region in southwest Benin.

Seme installation, Benin’s sole oilfield, was shut down in December 1998, after 16 years of unprofitable operations.

During the first 12 years of oil drilling, the installation incurred debts worth 28 billion CFA francs, which was written off, thanks to the donor community.

From 1982 to 1998, 22 million barrels of crude oil produced brought in a total 138.9 billion CFA francs, of which Benin only kept 2.6 billion CFA francs.

The industry ran at a deficit during the past few years, it’s income not even sufficient to cover expenses. With broken underwater pipelines, 97 percent of extraction consisted of water, and, the remaining three percent oil, toward the end of last year.

A deficit of more than a billion CFA francs was posted by the now defunct state-run Seme Petroleum Project (PPS) in 1998, the last year of operation before it was closed down in 1998. Benin paid 300 million CFA francs of that debt, while Zetah has agreed to write off the balance of the 700 million CFA francs, according to the terms of the new contract.

While officials in Benin were looking for funds to dismantle the dilapidated Seme fields and to rehabilitate the environment, Zetah made known its interest in the remaining oil deposits.

The 25-year contract, signed with Zetah, seems to be a last- ditch effort to salvage Benin’s offshore oil operation.

Zetah, based in Cote d’Ivoire, and enjoys oil interests in Republic of Congo and Gabon, will provide the 44.5 million dollars necessary to rehabilitate the Seme installation.

According to the contract, Seme’s platform and the marine pipelines will all be rebuilt, and the 2,000-metre-deep wells reconditioned.

Zetah’s chief, Denis Christian Tetegan, says he expects future production to average 2,500 to 5,000 barrels daily.

As soon as the oil starts flowing to the market, Benin will receive 22 percent of the profits, according to the contract. This optimism stems from the rising price of oil on the world market, which has jumped to 20 dollars per barrel from only six several years ago.

In addition to paying the PPS’s old debt, the contract will provide additional economic incentives for Benin. Felix Essou Dansou, Benin’s Minister of Energy, says the accord holds other immediate financial benefits as well, most notably, the promise of “additional financial resources”.

He says the contract will create jobs and allow for the recruitment and training of personnel, including those laid off by the PPS.

Other advantages include Zetah’s provision of dismantling costs at the end of the contract period, special oilfield technical installations to ensure safe maritime navigation and prevent explosions and petroleum contamination of the ocean environment. The value of the dismantling programme is estimated at some 18 million US Dollars.

The resumption of drilling at Seme will help improve the country’s standing in the Association of African Oil Producers (APPA), which is based in Benin.

According to Tetegan, Zetah is a new oil company operating mostly in the “marginal oil fields” of several African countries. The contract, signed in Cotonou, provides for natural gas exploration as well, with an eye toward eventual extraction.

Petroleum provides only a small fraction of Benin’s total economy, which is heavily dependent on the export of cotton.

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