Osaka Matsui Management comments On Petronas as they join Exxon to sell their stake within Chad project
Osaka Matsui Management analysts have reported that both oil giants Petronas and Exxon are working with advisers on a proposed sale with their stakes in the Chad project expected to be worth more than $1 billion.
The project includes oil fields in southern Chad and a major pipeline transporting crude 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,” reported Michael Carter, Head of Global Equities at Osaka Matsui Management. “The combined holdings of both oil companies could be worth over $1 billion,” added Michael Carter.
“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,” commented Osaka Matsui Management ’s Alistair Richmond, Director of Corporate Trading.
Completed in 2003, the Chad project was a “pioneering initiative” between International Finance Corp., and the World Bank to prove that large-scale oil projects can significantly improve sustainable long-term growth opportunities, with designs that ensure efficiency and successful environmental and social mitigation, according to the IFC website.
Exxon is the operator of the Chad-Cameroon pipeline, the other investor in the scheme, apart from Petronas, is the Chad government, which in 2014 purchased the remaining 24% stake from Chevron Corp.
In Chad in 2016, Exxon was ordered to pay a $74 billion fine for underpaid royalties in the central African nation. At the time, the penalty was about five times more than Chad’s gross domestic product. The oil giant managed to settle with Chad and avoided the hefty fine, whereas Exxon 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,” further commented Alistair Richmond of Osaka Matsui Management.