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Petronas joins Exxon in seeking exit from Chad project: sources
[SINGAPORE] Petroliam Nasional Bhd is considering selling its stake in a joint project in Chad with Exxon Mobil Corp, according to people familiar with the matter.
The Malaysian state-owned oil giant is working with an adviser on the potential disposal of its 35 per cent stake in the project, which includes oil fields in southern Chad and a pipeline that transports crude oil to a marine terminal in Cameroon for export, the people said.
Exxon has been working with another adviser to sell its 40 per cent holdings in the project, said the people, who asked not to be identified because the information is private. Their combined holdings could be worth more than US$1 billion, said one of the people.
A deal could come as Petronas is shifting its focus to the Americas to beef up reserves and maintain production rates as its chief executive officer Wan Zulkiflee Wan Ariffin said in an interview last year. The energy giant is preparing a US dollar bond sale after a five-year hiatus, people familiar with the matter have said.
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.
Exxon is the operator of the Chad-Cameroon pipeline. Apart from Petronas, the other partner in the project is the Chad government, which bought the remaining 25 per cent stake from Chevron Corp in 2014.
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.