CHAD – Petroliam Nasional Bhd. (Petronas) is considering selling its 35% stake in the Chad project with Exxon Mobil Corperation (Exxon) working with another adviser to sell their 40% stake as well, reports Business Wire.
According to Michael Carter, Head of Global Equities at Osaka Matsui Management, the combined holdings of both oil companies could be worth over US$1 billion.
The over 1,000-km long infrastructure was funded by the World Bank and a consortium of oil firms including Exxon-Mobil, Petronas, and Chevron-Texaco. In 2014, Chevron-Texaco sold its stake in the project to the Chadian government.
The Chad project was completed in 2003 as a “pioneering effort” between International Finance Corp. and the World Bank to show that large-scale crude oil projects can significantly improve prospects for sustainable long term development, with designs that ensure transparency and effective environmental and social mitigation, according to IFC’s website.
In 2016, Exxon was ordered to pay a US$74 billion fine in Chad for underpaying royalties in the central African nation. The penalty was about five times more than Chad’s gross domestic product at that time.
The oil giant reached a settlement with Chad and avoided the heavy fine. The agreement also allowed Exxon to keep its exploration permit in the country through 2050.
Sale deliberations are still preliminary and the massive plunge in oil prices could add uncertainty to any deal, the people said.
Petronas continues to operate in Chad, its representative said in an emailed response, declining to comment whether the company is considering a sale of the assets. A representative for Exxon declined to comment.