Chad announced on Thursday the nationalization of all the assets of Esso Chad, a former subsidiary of U.S. hydrocarbon giant ExxonMobil, which N’Djamena is contesting the recent sale to a British company, Savannah Energy PLC. The latter reacted strongly to this decision in a statement, denouncing a direct violation of international conventions and a recent arbitration in its favor of the International Chamber of Commerce in Paris (ICC).
According to the decree signed by Chadian President Mahamat Idriss Déby Itno, “all assets and rights of any kind arising from the conventions, research permits, operating licenses and authorizations for the transport of hydrocarbons of the company Esso Exploration and Production Chad Inc. are nationalized”. The Doba field in the south of the country, concessions in certain fields, the sale of extracted oil and a stake in the Chad-Cameroon pipeline are thus affected by this nationalization.
In December 2022, Savannah Energy announced the sale of all assets of the subsidiary Esso Exploration and Production Chad Inc. by ExxonMobil. This sale was immediately contested by Chad, claiming that it was carried out despite the express objections of the Chadian government and in disregard of its right of pre-emption. The case was brought before the ICC, which arbitrated on January 7 in favor of Savannah Energy.
Chad’s Minister of Petroleum, Djerassem Le Bemadjiel, has not yet commented on the reasons for this nationalization, but the ministry had already justified its opposition to the sale of the assets last December, arguing that “the Doba field and the Chad-Cameroon pipeline are vital and sovereign assets for Chad, and cannot be jeopardized by an irregular operation.
The nationalization comes after Savannah Chad Inc., the new name for Esso Chad, had already halted the decline of the ExxonMobil subsidiary and launched investments to substantially increase average daily production to 29,349 barrels since December 9, 2022. Chad’s decision could lead to legal action by Savannah Energy, which is challenging the nationalization of the assets and the arbitration in its favor.
Chad, which has been an oil producer and exporter since 2003, is highly dependent on hydrocarbon revenues, which will account for 11.33 percent of its GDP in 2020, according to the World Bank.
In conclusion, the nationalization of Esso Chad’s assets by the Chadian government marks a turning point in the history of the country’s oil industry. This decision, which follows a contested sale to a British company, demonstrates Chad’s desire to protect its vital and sovereign assets.
