Chevron departure from Doba marks Chad decline
The company has sold its interest to the government for $1.3 billion
Chevron, a participant in Chad’s Doba basin oil development, is pulling out of the country, as Doba production declines and clashes with the government increase. The company sold its 25% interest in the seven Doba fields, together with its smaller share in the landlocked country’s export pipeline, to the government for $1.3 billion. Other interests are ExxonMobil, the operator, with 40% and Petronas with 35%.
Production from the fields averaged only 72,000 barrels a day (b/d) last year, after declining steadily from 170,000 b/d, achieved two years after the development started flowing in 2003. The development, which involved constructing a 1,070 km-long pipeline to the Cameroon coast, had been planned to flow at a plateau rate of 225,000 b/d.
Technical problems were evident soon after start-up, when production of the heavy and acidic 21°API crude was affected by water-breakthough and falling reservoir pressure. Numerous additional infill and water-injection wells had to be drilled, taking the total of production wells to more than 500. It is understood that a substantial additional investment is needed to stop a further decline in output.
Meanwhile relations between the companies and the government have been strained by tax claims. In 2006, Chevron and Petronas were threatened with expropriation of their interests if they did not agree to higher royalty payments, although the dispute was resolved through negotiation. It re-emerged in March this year when the government claimed nearly $840 million from ExxonMobil and partners, to cover an increase in the royalty rate from 0.2% to 2%.
Despite the difficulties, other companies have made investments in Chad, giving the country a total production of nearly 100,000 b/d last year. The export pipeline also carries crude produced from the Badila field, developed by Canada’s Caracal, which is in the course of being acquired by Glencore. Badila production has built up to 14,000 b/d and is targeted to reach 40,000-45,000 b/d by end-year.
China National Petroleum Corporation has a number of small fields in the Bongor basin, supplying the crude through a 311 km pipeline to the N’Djamena refinery. The company constructed the 20,000 b/d facility in a 60:40 venture with the government, bringing it on stream in 2011.