Chad Approves Sale of Stakes in $3.5 Billion Oil Venture to Chevron and Petronas

Chad's government has approved the sale of stakes in the $3.5 billion Chad-Cameroon oil development and pipeline project to Chevron and Malaysian state oil company Petronas, paving the way for the World Bank to approve its share of financing for the project. The approval was announced after a cabinet meeting, with Chevron signing up for a 25% stake and Petronas taking 35%. The project aims to produce 225,000 barrels per day in southern Chad, construct a 660-mile pipeline, and build a loading terminal at Kribi on Cameroon's Atlantic coast. The equity partners will invest around $2.1 billion in the project, which is expected to receive a $90 million loan package from the World Bank.

Key Takeaways:

• The Chad government has approved the sale of stakes in the $3.5 billion Chad-Cameroon oil development and pipeline project to Chevron and Petronas, with Chevron taking 25% and Petronas 35% equity.
• The project, operated by Exxon Mobil, aims to produce 225,000 barrels per day and construct a 660-mile pipeline through Chad and Cameroon.
• The equity partners will invest around $2.1 billion in the project, with the World Bank contributing a $90 million loan package.
• The project has been plagued by delays and concerns over Chevron's finance specialists, who were worried about Petronas' rating.
• Conoco had bid for the spare equity but failed to secure the necessary approvals, while Loik Le Floch-Prigent, the disgraced former chief executive of Elf Aquitaine, advised Chadian President Idriss Deby to reopen the contest for stakes in the consortium.

Statistics:

• The project aims to produce 225,000 barrels per day in southern Chad.
• The equity partners will invest around $2.1 billion in the project.
• The project will receive a $90 million loan package from the World Bank.
• Petronas' rating has been downgraded three times since 1995, from A2 in 1997 to Baa3 in 1998, before being given a positive outlook in March.
• Chevron's rating is Aa2, while Exxon is a top-rated company.

Sources:

• A government statement issued after a Chadian cabinet meeting.
• A January source indicating Chevron's finance specialists were concerned about Petronas' rating.
• A March 1998 source indicating Moody's Investors' Service had downgraded Petronas' rating.
• A September 1998 source indicating Petronas' rating was downgraded again.
• A Paris source indicating Conoco had bid for the spare equity.
• A source close to the project indicating Exxon staff was desperately anxious for Shell's and Elf's shoes to be filled.