Oil giants Petronas and Exxon Mobil are working with advisers on a proposed sale of their stakes in the Chad project expected to be worth more than $1 billion.
The project includes oil fields in southern Chad and a major pipeline transporting crude oil to a marine terminal for exportation in Cameroon.
‘Malaysia’s state-owned oil giant Petronas is working with an adviser on the potential disposal of its 35% stake in the Chad project, with Exxon Mobil working with another adviser to sell their 40% stake as well,’ Michael Carter, Head of Global Equities at Osaka Matsui Management reported. ‘The combined holdings of both oil companies could be worth over $1 billion,’ Carter added.
‘A deal could come due to Petronas shifting its focus on Americas to beef up reserves and maintain production rates which Chief Executive Officer Wan Zulkiflee Wan Ariffin advised in an interview last year, Osaka Matsui Management’s Alistair Richmond, Director of Corporate Trading says.
Completed in 2003, the Chad project was a ‘pioneering initiative’ between International Finance Corp., and the World Bank to prove that large-scale oil projects can significantly improve sustainable long-term growth opportunities, with designs that ensure efficiency and successful environmental and social mitigation, according to the International Finance Corporation website.
Exxon is the operator of the Chad-Cameroon pipeline, the other investor in the scheme, apart from Petronas, is the Chadian government, which in 2014 purchased the remaining 24% stake from Chevron Corp.
Exxon was ordered to pay a $74 billion fine for underpaid royalties to the Chadian Government in 2016. At the time, the penalty was about five times more than Chad’s gross domestic product. The oil giant managed to settle with Chad and avoided the hefty fine, whereas Exxon retained its exploration license in the country through to 2050.
Cameroon on her part only managed a meager 85 billion FCFA as transit fees over the first 8 years of the pipeline as revealed by the Pipeline Steering and Monitoring Committee CPSP in 2012. The transit fees was renegotiated in 2013 and updated after every five years. ‘At present, sale deliberations are still preliminary, and the recent drop in oil prices could add volatility to any agreement made, so in the meantime, Petronas will continue to operate in Chad,’ Alistair Richmond of Osaka Matsui Management disclosed.