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Part 1
Chad-Cameroon: Cotco pipeline company meeting points to possible thaw in relations
Cameroon Oil Transportation Company’s new senior leadership team features figures from Chad and Cameroon, prompting speculation that their bilateral rift may be healing. UK-based independent Savannah Energy remains a central player, but may come under further pressure if the two governments start acting in concert, writes James Gavin.
The appointment of a new management team at Cameroon Oil Transportation Company (Cotco) has fed speculation that the rift between Yaoundé and N’Djamena over control of the pipeline link may be healing.
A board meeting in Cameroon’s commercial capital Douala on 4 July named Cameroonian Bako Harouna as chief executive and Chadian petroleum and energy minister Djerassem le Bemadjiel as chairman of Cotco.
Under the new arrangements, Bako – until now deputy managing director of the Port Authority of Kribi – will oversee the pipeline’s Cameroon section, while Bemadljiel will oversee the Chadian tranche.
Bemadjiel told reporters the two sides had put the “interest of our two countries above any other consideration”.
The bilateral spat began with a deal last December for ExxonMobil to sell upstream and midstream assets to United Kingdom-based independent Savannah Energy (AE 475/8). The transaction included a 40% stake in the Chad-Cameroon pipeline and was fiercely opposed by Chadian Interim President Mahamat Idriss Déby Itno.
In March, N’Djamena seized Savannah’s interest in Tchad Oil Transportation Company (Totco), which owns and operates Chad’s section of the Chad-Cameroon oil export pipeline (AE 482/19). Subsequently, Chad tried in May to force Savannah out of Cotco at a shareholder meeting held in Paris (AE 486/28).
Cotco’s management rejected that move, with general manager Nicolas de Blanpré – who is also Savannah’s Chad country manager – calling the meeting “illegitimate”.
Cameroonian national oil company Société Nationale des Hydrocarbures (SNH) wrote to Bemadjiel, pointing out it had not been invited to the Paris meeting.
SNH director-general Adolphe Moudiki has urged Chad to cede 20% of its stake in Cotco, leaving a share distribution of 35.2% for Cameroon and 33.8% for Chad. Moudiki is also understood to have urged the Chadian government to act to prevent a shareholder crisis.
While there has been no sign of a change to the shareholder structure, the bilateral atmosphere appears to have improved, which may add to the pressure on Savannah.
However, analysts have told African Energy it would be difficult to force the ambitious indie out of Cotco.
Cameroon remains central to Savannah’s thinking, even more so since its assets were seized in Chad (AE 483/28). Chief executive Andrew Knott told shareholders in July that Cotco was a potential catalyst for further growth in Cameroon.
Part 2
Meanwhile, Cameroon is keen to increase its holding in the pipeline, to reflect that most of the link runs over its territory, at 903km compared to just 178km in Chad, from where the oil is sourced.
In early 2023, Savannah agreed to sell a 10% interest in Cotco to SNH for $44.9m, leaving it with 31.1%. As part of the agreement, SNH and Savannah pledged to support one another as shareholders.
Recent reports from Cameroon said the 4 July meeting was precipitated by internal Cotco developments, including allegations that Savannah-appointed members of the board had threatened to shut down the pipeline. This was cited in a letter dated 30 June from Cameroon state minister Ferdinand Ngoh Ngoh to a colleague, suggesting the authorities in Yaoundé felt forced to take precautionary steps to ensure the pipeline’s smooth operation.
African Energy understands that Savannah remains in operational control of the pipeline, which it sees as giving it the right to appoint Cotco’s general manager, who retains signing capacity over bank accounts. (This is a significant element, given past threats by Chad to seize control of bank accounts.)
Savannah has made no official comment about the 4 July meeting. However, African Energy understands that Cotco’s general manager has pointed out that it would be difficult to operate the pipeline safely were Chad to freeze the company’s bank accounts, as it would be unable to pay vendors or suppliers.
That observation appears to have been taken by some as a threat, in the context of a wider dispute between Savannah and Chad that is subject to an arbitration process at the International Chamber of Commerce’s International Court of Arbitration, which is expected to last 18-24 months (AE 486/28).
According to one source who spoke to African Energy, boardroom machinations at Cotco – and the apparent rapprochement between Yaoundé and N’Djamena – may fit into wider dynamics in local politics, where factions are manoeuvring in anticipation that 90 year-old President Paul Biya will eventually depart and that control of SNH is a significant issue – and boon – for whoever emerges running post-Biya Cameroon (AE 479/35, 410/22).
Some elite factions in Cameroon are said to be more closely aligned with SNH than others – some of whom may be more open to dealing with Chad. Factional rivalry is said to be having a bearing on the management of the pipeline company.
Seems like Cotco shareholding is safe and we have access to bank accounts and revenues from Cotco.
Such a relief I must say.................................
You're joking, of course.
Seems like even Cameroon, once thought to be a staunch ally of SAVE in this spat, is joining forces with the enemy.
SAVE will be the loser, whatever happens.
Nice one, AK.
Olderwiser - Nobody is joining forces everyone is basically got their own agenda. I personally feel as it stands as of today the Cotco holding is safe as the article suggests. This could change further down the line but we can only go by today's news.
I believe the Cotco situation has reached a stage where each of the 3 parties feel their shareholding is now equitable, and as the article seems to allude the chad government threat on freezing bank accounts is more to do with the chad doba oil field dispute and they thought they would use is a threat to Savannah so they fold in the icc dispute but Chad doesn't have the legal right or jurisdiction to freeze Cotco accounts.
"However, analysts have told African Energy it would be difficult to force the ambitious indie out of Cotco."
"Cameroon remains central to Savannah’s thinking, even more so since its assets were seized in Chad (AE 483/28). Chief executive Andrew Knott told shareholders in July that Cotco was a potential catalyst for further growth in Cameroon."
"African Energy understands that Savannah remains in operational control of the pipeline, which it sees as giving it the right to appoint Cotco’s general manager, who retains signing capacity over bank accounts. (This is a significant element, given past threats by Chad to seize control of bank accounts.)"
"However, African Energy understands that Cotco’s general manager has pointed out that it would be difficult to operate the pipeline safely were Chad to freeze the company’s bank accounts, as it would be unable to pay vendors or suppliers."
Yes, I'd agree with you on that one TiL. I thought there was a good chance that we had lost control of the bank accounts, but if the article is correct then we should have been receiving revenues since the deal, and continue to do so. It's always difficult to read these things without knowing what is going on behind the scenes. If you read the Africa press it's clear that Chad and Cameroon appear to be brokering some sort of compromise between themselves. It's natural that they would put relations between the countries before agreements with a oil and gas company, but the article does suggest we have kept control of the cotco monies due to us which is a big positive. As we know things can change but I certainly don't take this article as particularly pessimistic.
Komakino - Agreed I also think if we had lost control of the bank accounts that would have deemed an rns worthy news for Savannah to put out and they haven't so I believe as far as Cotco is concerned it remains secure for the time being which I believe is positive and we continue to benefit from it's revenues ;).
I have found africa energy as more credible source of news as there articles always provide the full story, whereas I find africa intelligence is used to drive agendas and feed stories to peddle a narrative and there stories tend to be only few lines which I find frustrating.
I found this comment interesting - "Cameroon remains central to Savannah’s thinking, even more so since its assets were seized in Chad (AE 483/28). Chief executive Andrew Knott told shareholders in July that Cotco was a potential catalyst for further growth in Cameroon"
I wonder if we could be lining up some oil or gas acquisitions in cameroon............................................... aside from the renewable project
There is an excellent lengthy article this morning re Cameroon in todays AI. They’ve just recently been put on the GAFI and EITI grey list for countries since June 23. Also SNH which is part of COTCo wants an investigation authorised by Biya to look into the payment of money to executives at the company of which Glencore had admitted to. Too long to post but shows there is support for SAVE from some inside SNH and with Save being a member of EITI - adds further support
TiL - didn’t SAVE set up a business called Savannah Energy SC a while ago? If so South Cameroon maybe? And hydrocarbon to boot and no link to renewable in the name.
Rockyride - Yh looks like it's probably that entity..............................
Zengas - do you know what the cashflow for the Cotco 41% stake is
Right now my wish is to see S. Sudan completed on non recourse debt terms and not so much COTCo given where our size will hopefully soon be.
If as i hope S.Sudan circa 300 mmbls reserves and 50-55k bopd = possible $1.3-$1.5b revenue + i believe Accugas should be circa $300m revenue after that last gas contract = $1.6-$1.8b.
There's a 2nd Hydrocarbon asset top come by year end - but if it's 5-10-15k or more bopd region its possibly another $135m - $400m+ revenue range to think about, it all depends on how small or big the next deal is (and more than 1 possible).
Right now the S.Sudan deal is reducing in cost until completed.
As for Exxon Chad - let'stake it in our stride and context of overall lost immediate revenue - it's with the ICC as the proper course. End of the day we win the case or don't and Chads oil has to load at Kribi and leave the Cameroon coast by ship for international markets if we win.
We lost out on the 22.5K bopd revenue from Chad Exxon/Petronas - about $600m + a combined revenue for TOTCo + COCTCo of $152m - so in all the 2 deals were worth an expected revenue region of $750m.
Overall that would have meant we would have been on a revenue guide of about $2.35b - $2.55b by now ahead of the intended acquistion beyond S.Sudan -so thats how close we were and maybe still are depending on the next deals by this year end and '24.
Our remaining 41% COTCo revenue share should still account for $75-$80m as the pipeline element was about 90% COTCo to 10% TOTCo.
Nigeria/Accugas $300m, S.Sudan estimate $1.3-$1.5b and on deal completion see us on $1.7b - $1.9b revenue ahead of the next follow on hydrocarbon deals.
As for S.Sudan i think they will derisk it further by building on a few more geographically spread hydrocarbon deals ('at least 1' by this year end) and to me its the unfortunate order they come to market in as on how risk is percieved now - versus a few more deals under our belt when non recourse to the company.