Africa-focused Savannah Energy is in talks to snap up Exxon’s upstream and midstream asset portfolio in Chad and Cameroon as the American energy giant continues to retreat from the African continent.
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The Chad/Cameroon development project includes oilfields in southern Chad and a pipeline system to transport crude oil to a marine terminal in Cameroon for export.
If the acquisition succeeds, Savannah Energy will have a significant footprint on the energy landscape in the continent.
In Nigeria, Savannah owns and operates a large-scale integrated gas production and distribution business that provides gas contributing to over 10 percent of Nigeria’s daily national average power generation and is significant cash flow generative.
In Niger, it has licence interests covering approximately 50 percent of the country’s main petroleum basin, the Agadem Rift Basin, in the southeast of the country.
To date, the company has made five exploration discoveries from five attempts in Niger. For Nigeria and Niger, we have 2P and 2C reserves and resources of 157 MMBoe with a life of 31 years,” Savannah Energy says on its website.
Last year was Savannah Energy’s first full year of ownership since the completion of the acquisition of its Nigerian assets.
“Against a challenging backdrop, we recorded a robust financial and operating performance. We beat all of our original financial guidance metrics,” said Andrew Knott, CEO of Savannah Energy, underscoring why the company is happy to proceed with the deal.
Last year, Exxon and Petronas began working with advisers on a proposed sale of their stakes in the Chad project which 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 was also searching for a buyer to dispose of its 35 percent stake in the Chad project, with Exxon working with another adviser to sell their 40 percent stake as well.
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 percent stake.
In the face of energy transition fueling shareholder rebellions and uncertainty in African countries, oil majors are running for the hills.
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.
