Yaoundé - 29 November 2023 -

CEMAC calls on Chad to transfer part of its shares in Cotco to Cameroon

CEMAC calls on Chad to transfer part of its shares in Cotco to Cameroon
  • Comments   -   Tuesday, 23 May 2023 17:22

(Business in Cameroon) - Last May 15, Daniel Ona Ondo, the President of the CEMAC Commission, signed a decision authorizing the Chadian National Oil Company (SHT) to acquire Petronas Carigali Chad Exploration & Production Inc. This decision, which follows the approval of the Community's Competition Council, grants the Chadian government, via SHT, an official dominant role in the crude oil production and transportation agreement with Cameroon.

In detail, N'Djamena now holds 60% of the shares in the Doba oilfield, 59.82% in Tchad Oil Transportation Company (Totco), which manages the Chadian section of the 1,070 km pipeline connecting Chad to the Port of Kribi, and 53.77% in Cameroon Oil Transportation Company SA (Cotco), which manages the Cameroonian section of the pipeline and the storage infrastructure located at the Port of Kribi.

However, the green light given by CEMAC is conditioned on a set of commitments to be made by the Chadian party to make sure that the new adjustments do not harm the other stakeholders. Indeed, Cemac authorities demand that part of the Chadian shares in Cotco be transferred to Cameroon. It is also required that the SHT maintain the composition of Cotco's BoD with a minimum of three members and a maximum of twelve. Additionally, the Chadian company is called upon "to amend the articles of association only in compliance with the regulations governing competition within the community and the OHADA Uniform Act relating to commercial companies and economic interest groups.

The document signed by Daniel Ona Ondo does not specify the proportion of shares to be transferred but it does suggest that the Cameroonian government may have a slightly greater influence in this infrastructure, which is over 90% deployed on its territory. This appears to be a deal for N'Djamena after its neighbor finally gave its green light for the transaction with Petronas.

Easing of tensions

With only a 5.17% stake in Cotco, Yaoundé has always expressed a desire to acquire more shares in the company. Back in 2014, when SHT acquired the 25% stake previously held by Chevron, Cameroon entered negotiations with Chad to have part of these assets but the offer was rejected. Yaoundé made a second offer in 2022 after ExxonMobil and Petronas announced their intention to sell their shares in the pipeline. Two Cameroonian delegations, led respectively by the late Deputy Prime Minister Amadou Ali in April 2022 and by the Deputy Secretary-General of the Presidency, Paul Elung Che, in November of the same year, went to N'Djamena for negotiations.

After another refusal from its neighbor, Cameroon, through SNH, entered into a shareholders' agreement with Savannah Energy on April 20, 2023. The agreement, still pending validation, involves the repurchase by the Cameroonian state-owned oil company of 10% interest acquired by the British oil and gas junior company in Cotco through the purchase of Exxon Mobil's 41.06% stake. And the country did not approve the acquisition of Petronas' assets by SHT, thus blocking the process.

In an April 20 statement, N'Djamena, considering that the actions of its neighbor were undermining the relations between the two countries, called its ambassador back home for "consultation." The country also opposes the acquisition of Exxon Mobil's assets in Chad and Cameroon by Savannah Energy, which it referred to as a "nebulous" entity.

However, since then, the visit of the Cameroonian Deputy Secretary-General to Chad followed by the visit of his Chadian counterpart to Cameroon on May 19 demonstrates that the tensions between the two countries have been resolved. "I believe that the issues have been resolved, the cloudy atmosphere that seemed to weigh on our relations has been cleared, and Cameroon and Chad now see in the same direction," reassured Gali Ngothe Gatta after a working session at the Unity Palace in Yaoundé on May 19, 2023.

Translated from French by Firmine AIZAN

Written by Cédrick Jiongo

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