(Business in Cameroon) - On February 24, 2021, online daily Africa Intelligence revealed that The National Hydrocarbons Corporation (SNH) of Cameroon offered XAF150 billion to buy Chadian National Hydrocarbon Company (SHT)’s 21% stake in the Chad–Cameroon Petroleum Development and Pipeline Project.
According to the online daily, the offer was made in January 2021 through a correspondence sent to SHT by Galileo Negoce & Conseil, a Chadian institution that acts as SHT’s counsel in the framework of that transaction. The said transaction was first discussed in 2018, through written correspondence between Adolphe Moudiki, Director-general of the SNH, and Béchir Madet, then Chadian Minister of Energy.
Although the offer has not been confirmed by the involved parties yet, it is in line with the actions initiated by Cameroon in recent years to boost its gains in the pipeline mainly located on its territory.
According to Africa Intelligence, the stake-buying project was revived because of the economic challenges facing Chad. Indeed, the country has to pay its debts towards international private creditors, Glencore notably. The country was, by the way, one of the first to request the debt moratorium granted by G20 countries to support developing countries affected by the coronavirus pandemic.
Should the deal be successful, Cameroon (which obtained a revalorization of its transit duties and got parties to agree to the duties to be actualized every five years) will increase its stake in this oil transporting infrastructure. However, given the oil price uncertainties, some people may question the economic opportunities represented by such investment, while Exxon-Mobil and Petronas are trying to divest from the project (On March 10, 2020, Business Wire revealed that private wealth management company Osaka Matsui Management had launched negotiations to sell Exxon-Mobil and Petronas’ stakes on the pipeline.).
To understand Cameroon’s interest in that project, the geopolitical facts should be integrated into the analysis. Indeed, in its northern region, Cameroon shares borders with Nigéria, Chad, and the Central African Republic. In the said northern regions, the crisis in the Central African Republic and Boko Haram’s attacks in Nigeria creates an instability really difficult to contain. Should Chad be destabilized, Cameroon will lose an important ally supporting the stability in those northern regions. That is, for instance, why in the past, Cameroon willingly supported Chad when it needed support.
The 1000-km Chad-Cameroon pipeline has been operational since 2003. Thanks to that oil transporting infrastructure, close to 40 million barrels of oil produced in Chadian oil fields by companies like China National Petroleum Corporation (CNPC), Exxon Mobil, and Petronas are exported yearly.
The construction of this pipeline was funded by the World Bank and a consortium of oil companies constituted of Exxon-Mobil, Petronas, and Chevron-Texaco (which sold its stake to Chad in 2014). According to experts, three years after its commissioning, the about XAF2,300 billion investment was fully amortized thanks notably to a rise in oil prices.
Brice R. Mbodiam