Savannah Energy at the center of diplomatic crisis between Cameroon and Chad

The Chad-Cameroon pipeline project started as a joint venture among one of the world’s largest publicly traded international oil and gas company, an American firm (ExxonMobil), another American firm (Chevron), a Malaysian oil company (Petronas), and both the government of Cameroon and Chad.

Along the line, due to unstable relationship between Chevron and the government of Chad, the oil company sold its shares (25%) to the Republic of Chad.

In 2020, ExxonMobil decided to sell its own shares (40%), and that is how a London-listed firm (Savannah Energy) came into the picture.

The takeover of ExxonMobil by Savannah Energy was however not an easy one. Chadian authorities contested the process from all fronts saying that the final terms of the deal were substantially different from what had been presented to them in 2021, one year after it was initiated.

An accusation denied by Savannah Energy officials who responded saying that its acquisition of ExxonMobil’s interest in the Doba oil fields in Chad and the TOTCO Pipeline “was conducted in full conformity with the requirements of the governing documents and the applicable law”.

December 2022, ExxonMobil finally pulled out of Chad but no agreement was reached with the state on its final tax settlement or better still on departure bonuses. The bonuses were however not spelled out in the convention binding the parties according to sources.

Chadian authorities, unhappy with the conditions under which the US major ExxonMobil decided to leave the country, did all to prevent Savannah Energy from resuming operations on the disputed Doba oil deposits.

Ndjamena dragged Savannah Energy to court and blocked the takeover process. Savannah Energy referred the case to the International Chamber of Commerce in Paris which gave reason to the London-listed firm.

Reports indicate that Chad however went on to nationalised the assets of ExxonMobil transferred to Savannah Energy including hydrocarbon permits and exploration and production authorisations.

As if that was not enough, Chadian Minister of energy, Djerassem Le Bemadjiel, and the secretary general at the presidency, Gali Ngothe Gatta, are quoted by “Africa Intelligence” to have forced Savannah Energy’s staff in some of the oilfields in Chad to leave the country.

Chad, it should be noted continue to demand for the payment of departure bonuses from ExxonMobil on one hand, and on the other hand, is casting a vote of doubt on the experience of Savannah Energy in the oil sector, insinuating that the firm is highly backed by Cameroonians who want to control the oil depots in Chad.

ExxonMobil’s assets which are worth $407 million, included a 40 percent stake in Chad’s Doba oil project which comprises seven producing oilfields with a combined output of approximately 28,000 barrels per day (bpd).

It also included Exxon’s interest in the 1081km Chad-Cameroon pipeline transportation system, floating storage in Kribi and offloading facility offshore in Cameroon.

Read also: https://newsupfront.com/cameroon-savannah-energy-takes-over-bini-a-warak-hydroelectric-project/

Over the years, the government of Cameroon had initiated actions to boost their gains in the pipeline project mainly located on its territory. The country opted to acquire shares from Savannah Energy.

That is how on Wednesday 19 April 2023, Cameroon’s National Hydrocarbons Corporation (SNH) signed a share purchase agreement (SPA) with Savannah Energy, for the acquisition of 10% of the issued share capital in Cameroon Oil Transportation Company (COTCo).

Savannah’s wholly-owned subsidiary, ‘Savannah Midstream Investment‘, owns the shares in COTCo. COTCo it should be noted owns and operates the 903-kilometre Cameroon section of the Chad-Cameroon export pipeline, the Kome Kribi 1 floating storage and offloading facility, and related infrastructure.

Glencore Xstrata, it should be noted also owns 90% of the market exporting rights of Chad’s oil.

In consideration for the sale of the shares, SNH will pay about FCFA 26 million to Savannah Midstream.

Under the terms of the SPA, SNH and Savannah Midstream have pledged their support for each other as shareholders in COTCo.

In a statement, Andrew Knott, CEO of Savannah Energy, commented: “We are pleased to have reached this agreement with SNH. This transaction is in line with our strategy to monetise our interest in COTCo and to reduce our net debt position. We believe it is a positive step towards unlocking the value in our portfolio and delivering Projects that Matter in Africa.”

After taking over Chevron, Chad initiated moves to buy the shares of Malaysian firm (Petronas). A release from the presidency of the Republic of Chad indicates that the deal is at the level of CEMAC’s competent jurisdiction, and while the other CEMAC countries have given their word, only the Republic of Cameroon is yet to reply.

According to the release from the presidency of the Republic of Chad, Cameroon did not support Chad in their struggle with Savannah Energy PLC, during the process of taking over ExxonMobil.

The Minister of state, secretary general at the presidency of Chad, Dr. Gali Ngothe Gatta, in the release revealed that some senior personalities in Cameroon are hiding behind Savannah Energy and they relentlessly interfere at the level of Chadian authorities.

Buy buying 10% of the shares of Savannah Energy without informing Chad, Chadian authorities consider the move from Cameroon as disrespect to the relationship between the two friendly and neighbouring countries in the CEMAC sub region.

To protect their interest in the deal, Chad opted to call back it’s ambassador to Cameroon for consultation, on Thursday 20 April 2023. Cameroonian authorities are yet to officially react to the decision.

Many had expected Cameroon to recall her ambassador to Chad in response but that is not the case at the moment. Political analysts believe that something can be done through dialogue.

Cameroon’s opposition leader, national president of the Cameroon Renaissance Movement (CRM) party, prof. Maurice Kamto, in a public statement enjoined the president of the Republic, Paul Biya, to step into situation and fix it with immediate effect before it gets out of hand.

The international legal mind, equally urges the parliament to immediately open up parliamentary investigations into the allegations of Cameroonians hiding behind Savannah Energy PLC.

In the meantime, the completion of the transaction between SNH and Savannah Energy is subject to certain conditions related to amendments to the bylaws of COTCo and it is expected to occur in the second half of 2023.

Read also: https://newsupfront.com/cameroon-savannah-energy-takes-over-bini-a-warak-hydroelectric-project/