RE: Africa Energy - Cotco Piepeline Update21 Jul 2023 06:53
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.
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