Glencore Arranges $1bn Oil Loan For Chad

Courtesy of the Financial Times, a report on Glencore’s interest and involvement in Chad:

Glencore has organised a plus-$1bn loan backed by crude oil to allow Chad to buy the assets of Chevron in the country, the latest sign of the commodities house’s interest in the central African nation.

The pre-export finance deal enabled the country’s state-oil owned company, the Société des Hydrocarbures du Tchad (SHT), to purchase Chevron’s assets in Chad for about $1.3bn, including several oilfields operated by ExxonMobil.

Glencore, the world’s largest commodities trader, is already present in the African country after it bought Caracal Energy, a Chad-focused oil company, for $1.35bn in April. The trading house first invested in Chad in 2012 when it paid about $300m for a stake in several oilfields.

The loan is very significant and equals to roughly 10 per cent of the Chad’s annual gross domestic product, estimated at just above $11bn in 2012.

Swiss-based commodities trading houses are trying to secure oil supplies from African countries by investing in local production, as in the case of Mercuria in Nigeria with a stake in Seplat, or through pre-export finance facilities, which Vitol and Trafigura have arranged in the past.

The deal between the SHT and Chevron was announced by the US company on Friday, but the crucial role of Glencore was not disclosed. The trading house is arranging the four-year $1.25bn loan, and several international banks including Deutsche Bank, Natixis and Crédit Agricole and regional development lenders are also participating in the deal, according to two people familiar with the situation.

The purchase will transform the SHT, increasing significantly its production. The company is buying a 25 per cent stake in seven fields in the Doba basin, which are operated by ExxonMobil.

The sale also includes a 21 per cent stake in the 1,070km pipeline that links the oilfields of Chad with an export terminal in the Atlantic through Cameroon.

ExxonMobil controls a 40 per cent stake in the fields, located in the Doba basin in southern Chad, while Petronas of Malaysia has a 35 per cent interest. The 25 per cent stake that the SHT has bought equalled to roughly 18,000 b/d of the Doba field’s output last year, worth more than $600m annually at current prices.

“[The deal] is highly transformational for Chad and the SHT”, said a person familiar with the transaction.

Chad is trying to stem declining oil production as fields mature. Output hit a peak of 176,000 b/d in 2005, but it was down to 101,000 b/d last year.

On top of Exxon, Petronas and Glencore, the Chinese state-owned CNPC also operates in the country. The nation ranks as the 10th-largest oil reserve holder among African countries, with 1.5bn barrels of proven reserves as of 2013.

This entry was posted on Monday, June 16th, 2014 at 4:44 am and is filed under Chad.  You can follow any responses to this entry through the RSS 2.0 feed.  Both comments and pings are currently closed. 

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