Yaoundé - 25 April 2024 -

Cotco: Cameroon’s shares rise to 25.17% with Chad transferring additional 20%

Cotco: Cameroon’s shares rise to 25.17% with Chad transferring additional 20%
  • Comments   -   Friday, 18 August 2023 16:44

(Business in Cameroon) - Cameroon Oil Transportation Company (Cotco) has a new shareholder structure. SHT Overseas Petroleum (SOP), Tchad Petroleum Company (TPC), the Republic of Chad, and Cameroon’s National Hydrocarbons Corporation (SNH) are the new shareholders, said the company last August 7,  during a visit by its General Manager, Harouna Bako, to pumping station 3 –located in Belabo, Eastern Cameroon– of the Chad-Cameroon pipeline. 

The shares of each shareholder were not specified during that visit. However, in a press release, signed on August 1, 2023, Harouna Bako informed that the shared management of the Chad-Cameroon pipeline was officialized with Chad’s recent transfer of 20% of Cotco’s shares to the Republic of Cameroon. According to the release, that transfer brought Cameroon’s shares in the company to 25%. It is worth noting that Cameroon’s shares are precisely 25.17% since the National Hydrocarbons Corporation (Cameroon’s representative in the company) was already owning 5.17% of Cotco before the share transfer. The other shareholders (SOP and TPC) are fully owned by the Republic of Chad. Therefore, the Cameroonian neighbor now controls 74.83% of Cotco, which manages the Cameroonian side (903 km long) of the Chad-Cameroon Petroleum Development and Pipeline Project.

This new structure stems from the fact that Chad considers Savannah Energy as no longer a shareholder in Cotco. In a press release issued on June 2, 2023, the Chadian Ministry of Hydrocarbons states that all the directors appointed by Savannah Energy to head Cotco were dismissed during a general meeting held in Paris, France, on May 24, 2023. The reason provided for that dismissal is that Savannah Energy is no longer a member of the consortium of companies operating the Doba oil field in Chad, following the nationalization of ExxonMobil's Chadian assets on March 31, 2023. Therefore, the release states, per Coto’s articles of association, Savannah Energy is no longer entitled to hold the pipeline manager’s shares. 

After a multi-month diplomatic crisis, Chad convinced Cameroon to support that position. This support certainly came with the promise to transfer 20% of Cotco’s shares to Cameroon and the country’s ability to suggest a managing director for the pipeline manager. In the (finally frozen) deal between SNH and Savannah Energy, Cameroon would have gotten just 10% of Cotco. 

The International Chamber of Commerce’s ruling 

At the Board of Directors meeting initiated by Chad and held in Douala on July 4, the Cameroonian magistrate Harouna Bako, who was suggested by Cameroon as the General Manager of Cotco, was appointed by Chad. Chad’s Djerassem Le Bemadjiel and Haoua Daoussa were appointed Chairman of the Board and Deputy General Manager respectively. It was also decided to transfer the shares previously held by Savannah Energy in Cotco to Tchad Petroleum Company, which inherited the nationalized ExxonMobil's Chadian assets. 

"At the end of this operation, Chad will transfer an additional 20% of the company's shares to the Republic of Cameroon," states another resolution from the meeting. If to believe an extract from Cotco’s share account, this resolution has been implemented, leading to the new shareholding structure. 

Savannah Energy considers the decisions illegal. The British company contests the nationalization of ExxonMobil's assets, which would deprive it of its shareholder rights in Cotco. Proceedings are underway, notably before the International Court of Arbitration of the International Chamber of Commerce in Paris (ICC). On July 12, 2023, the junior oil and gas company requested emergency arbitration by the ICC to reinstate its directors, including Nicolas de Blanpré as Chairman and CEO. It also requested the suspension of all the decisions taken since the dismissal of the directors it appointed, pending a ruling on the merits of its dispute with Chad over the nationalization of ExxonMobil’s Chadian assets. Savannah Energy is specifically requesting the suspension of the decisions adopted during the General Meeting of May 24 and the Board of Directors meeting of July 4, which saw the appointment of Cotco's current directors and the transfer of its shares to TPC.

In his order of July 28, the emergency arbitrator, Marc Henry, ordered the suspension of the resolutions adopted at those two meetings. The order also prohibits Chad from enforcing the resolutions on third parties or parties sujected to Cotco’s articles of association until the dispute on the merits of the dispute over the nationalization is resolved. 

"Consequently, Cotco's Board of Directors [remains] that of May 24, 2023, which has not been” suspended says Nicolas de Blanpré in a message sent to the company's staff on August 3, 2023. In this message, he even introduces himself as Cotco's General Manager.

Harouna Bako still officiates as the General Manager 

Savannah Energy's conclusion is questionable. In the July 28 order, the ICC’s emergency arbitrator refuses to declare that "the composition of Cotco's board of directors is that registered with the clerk of the Douala-Bonanjo court of first instance on June 6, 2023, until the arbitral tribunal constituted on the merits rules on this issue." In other words, he refuses to formally recognize Nicolas de Blanpré as one of the directors of Cotco. The same order justifies that acknowledging that composition “would be tantamount to formalizing a shareholding situation which may appear questionable, and which therefore does not warrant, a priori, being 'legalized' pending the decision on the merits." 

According to the emergency arbitrator, Savannah Energy finalized the acquisition of ExxonMobil's Chadian assets without prior approval from Chadian authorities and without letters waiving the benefit of the right of first refusal, as required by the agreements binding the parties. Therefore, he believes, the validity of that acquisition can be questioned. 

Based on that fact, Harouna Bako has remained the General Manager of Cotco. To demonstrate that he is indeed in charge, the magistrate organized a working visit to some of the pipeline's sites. "This visit took place in a particular context... I had to encourage the staff on-site and send them a strong message, asking them to stay at work and avoid being distracted by manipulators," he told the press during his August 7 visit to the Belabo pumping station. Before that, on July 31, he visited the pressure-reduction station in Kribi, a seaside resort in the south of the country.

Operations are therefore continuing "serenely" on the Chad-Cameroon pipeline, despite "manipulative and malicious communications from Savannah Energy," assures Harouna Bako. For now, the latter has all the operating powers since the arbitrator also refused to grant Savannah Energy's request to prohibit "Cotco from making any payments from its accounts or from effecting any account movements between its accounts (...)." The magistrate must nevertheless foster his relations with SNH, which still has an ambiguous stance.  During the ICC’s emergency proceedings, SNH told the arbitrator that it was leaving “the matter to the discretion of the court.” In other words, it has no arguments to put forward against Savannah Energy.

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