In a move that could scare away foreign investments in the extractive sector, the Republic of Chad has nationalised all assets from the multinational oil giant Exxon Mobil, including its hydrocarbon and exploration permits. The decision comes three months after Exxon sold its rights to the UK-based Savannah Energy, triggering a dispute with the military government led by President Mahamat Idriss Deby. The sale, which was announced in December 2022, covered Exxon’s entire upstream and midstream portfolio in and came with a price of US$407m. Under the deal Savannah acquired a 40% interest in the Doba Oil Project, which includes seven producing oil fields with combined output of 28,000 barrels per day. It also included a 1,081km pipeline and a floating storage and offloading facility in Cameroon through which the Chadian crude is exported. The seizure of Exxon’s assets however, has effectively blocked the deal. Savannah has decided to challenge Chad’s decision in the courts.
Besides acquiring Exxon’s assets, Savannah, in 2021, had agreed to purchase the 35% stake held by the Malaysian state energy firm Petronas in the Doba Oil Project and a 30% indirect stake in the pipeline and related infrastructure. However, as Chad signalled its intent to potentially block the sale, Savannah and Petronas jointly terminated the transaction. Chad's national oil company, SHT Petroleum Chad Company Limited (SHT), retains a 25% interest in the Doba Oil Project. The outstanding 30% interest in the Chad-Cameroon export transportation system is held indirectly by SHT's affiliates, the Republic of Chad, and Cameroon's national oil company, Société Nationale Des Hydrocarbures. Petronas has not published a statement on the nationalisation of Savannah’s assets on its website and it appears its shareholding in the projects remain unaffected. Chad earlier recalled its ambassador to Cameroon in April over the asset sale dispute.
Chad, which has the 10th largest reserves in Africa, began producing oil in 2003 and has since been exporting 90% of its output. Exxon Mobil has been operating in the country for several decades, but the business climate has worsened since a military junta seized power in 2021 after former strongman was killed fighting Jihadists in the border regions, and installed his son as the head of the state in the face of stiff opposition from civilian politicians.
Meanwhile, in a move diametrically opposite to the one taken by Chad, the Liberia Petroleum Regulatory Authority has confirmed receiving Exxon Mobil's application for pre-qualification for four offshore blocks in Liberia. The news signals a return of the oil giant to the West African republic after six years. Exxon quit Liberia in 2017 after failing to find oil. Its latest application covers blocks 15, 16, 22, and 24, located along the southern Liberian coast.
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‘Completion of ExxonMobil transaction in Chad & Cameroon’, Savannah Energy, 09 December 2022.
‘Termination of SPA for PETRONAS’ Chad and Cameroon portfolio’, Savannah Energy, 13 December 2022
‘Chad contests Savannah Energy’s acquisition of Exxon Mobil assets: Govt’, Reuters, 13 December 2022
‘Chad-Cameroon statement’, Savannah Energy, 13 December 2022
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‘Chad says it has nationalized all assets owned by Exxon Mobil’, Al Jazeera, 24 March 2023
'Chad upstream asset update', Savannah Energy, 24 March 2023
‘Chad nationalizes Exxon Mobil assets amid dispute’, AP, 24 March 2023
‘Chad approves bill to nationalise assets ExxonMobil sold to Savannah Energy’, Reuters, 29 March 2023
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‘Q1 2023 Financial and Operational Update’, Savannah Energy, 13 April 2023
‘Exxon applies for Liberia blocks’, Energy Voice, 24 April 2023