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Yaoundé - 13 April 2024 -
Energy

Pipeline: Is the Cemac Commission oblivious to Savannah’s entry into Cotco?

Pipeline: Is the Cemac Commission oblivious to Savannah’s entry into Cotco?
  • Comments   -   Thursday, 25 May 2023 16:29

(Business in Cameroon) - In his May 15, 2023, decision authorizing Chadian oil company SHT to complete the takeover of Petronas' shares in Chad’s oil production and transportation system, CEMAC Commission’s chair Ona Ondo still considered Exxon Mobil as a shareholder in the consortium that operates the Doba oil wells in Chad and the over 1,000-km pipeline that connects Chad to Cameroon.

 "Considering that before the completion of the operation, Totco was 40.19% owned by Exxon Mobil, which also holds 41.06% of Cotco,[...] the acquisition of Petronas Carigali Chad Exploration & Production Inc. by the national oil company SHT is compliant with the common market rules in the Economic Community of Central African States," the executive indicated. 

Yet, in December 2022, British junior oil and gas company Savannah Energy announced an agreement to buy Exxon Mobil’s assets. The deal, valued at $407 million (about CFAF 248.3 billion), also included a 40% working interest in the Doba oil field. In his decision, the CEMAC Commission’s chair made no mention of Savannah Energy, as if the transaction with Exxon Mobil never took place. 

This omission reinforces the views of Chad, which has always disputed the December 2022 transaction on the ground that Savannah is a shady company. In early 2023, N’Djamena announced the nationalization of all the stakes belonging to an Exxon Mobil subsidiary in the country, including its stake in Totco. But even this nationalization is not taken into account in the May 15 decision. Concerning that part, however, there could be an answer since the nationalization case is still pending before the International Court of Arbitration of the International Chamber of Commerce in Paris.

Resumption of normal relations between Cameroon and Chad 

Chad wanted Cameroon’s support in its dispute over the Savannah acquisition. However, its neighbor legitimized the deal by signing an agreement for the acquisition, by Savannah, of a 10% stake in Cotco, for $4.9 million (nearly CFAF27 billion). 

"Completion shall occur upon satisfaction of certain conditions precedent related to amendments to the bylaws of COTCo and is expected to occur in H2 2023.[...]SNH and SMIL have pledged, inter alia, their support of one another as shareholders in COTCo,” Savannah Energy informed in a release published the day after the agreement was signed with Cameroon’s national oil company SNH.  

The deal became the subject of a diplomatic crisis between Cameroon and Chad. Nervetherlless, it was not finalized because Cameroon adopted a more conciliatory posture towards its neighbor. Yaoundé decided to agree to N'Djamena's acquisition of the assets of Petronas. In return, Chad agrees to cede part of its shares in Cotco to Cameroon’s SNH when the latter requests so, the CEMAC Commission indicates. 

"I think that the misunderstanding has been addressed, the clouds that seemed to hang over our relationship have been cleared and Cameroon and Chad are now looking in the same direction," said Gali Ngothe Gatta, Secretary General of the Presidency of the Republic of Chad, after a working session at the Presidency of the republic of Cameroon May 19, 2023.

Cédrick Jiongo 

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