Petronas, Exxon to Divest Stakes in Chad Project
Petronas and Exxon are working with advisers on a proposed sale of their stakes in the Chad project in Africa, according to Osaka Matsui Management analysts. The project includes oil fields in southern Chad and a major pipeline transporting oil to a marine terminal for exportation in Cameroon.
“Malaysia’s state-owned oil giant Petronas is working with an adviser on the potential disposal of its 35% stake in the Chad project, with Exxon working with another adviser to sell their 40% stake as well,” Michael Carter, Head of Global Equities at Osaka Matsui Management, said in a written statement. “The combined holdings of both oil companies could be worth over $1 billion.”
The Chad-Cameroon Petroleum Development and Pipeline Project involved the construction of a 1070 km pipeline to transport crude oil from three fields in southwestern Chad to a floating facility 11 km off the Cameroon coast. Finished in 2003, the project was an initiative between International Finance Corp. and the World Bank to show that large oil projects can improve sustainable long-term growth opportunities, with designs that reflect efficiency and environmental and social mitigation, according to the IFC website.
Exxon is the operator of the Chad-Cameroon pipeline. In addition to Petronas, the Chad government is also a partner with a 24% stake.
“A deal could come due to Petronas shifting its focus on Americas to beef up reserves and maintain production rates which Chief Executive Officer Wan Zulkiflee Wan Ariffin advised in an interview last year,” Osaka Matsui Management’s Alistair Richmond, Director of Corporate Trading, said in a statement.
Exxon was ordered to pay a $74 billion fine in Chad in 2016 for underpaid royalties in the central African nation. The company settled with Chad and avoided the fine, and it retained its exploration license in the country through to 2050.
“At present, sale deliberations are still preliminary, and the recent drop in oil prices could add volatility to any agreement made, so in the meantime, Petronas will continue to operate in Chad,” Richmond said.
Osaka Matsui Management is a private wealth management company with over $8.4 billion of assets under management.
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