Chad's Upstream Sector Income Could Erode Post-2021, GlobalData Warns

Chad's Upstream Sector Income Could Erode Post-2021, GlobalData Warns
Chad's income from the upstream sector will continually erode in the post-2021 period unless there is an oil price hike over the medium term or new large projects are brought online, GlobalData warns.

Chad’s income from the upstream sector will continually erode in the post-2021 period due to declining production from current and planned fields, unless there is an oil price hike over the medium term or new large projects are brought online, GlobalData has warned.

The hydrocarbon industry in Chad is an important sector for state income, representing more than 60 percent of state revenues prior to the fall in oil prices in 2014, GlobalData said.

The recent sustained low price environment, coupled with the expectation that production will begin to decline into the medium term, has led to “severe budgetary problems for the government” and pressure to raise additional revenues, with receipts falling by more than 50 percent from 2014 to 2015, GlobalData revealed.

The global research and consulting firm has warned that a strategy of increasing state take for upstream projects may create problems as the fiscal regime loses competitiveness. The undiscounted state take for a comparative development scenario is said to be currently in line with regional peers under the older concession regime and the current production sharing framework.



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