Key Points
- Chad said that it will nationalize assets owned by ExxonMobil.
- ExxonMobil was running the Doba oil project in the country.
- Chad rejects the deal between ExxonMobil and Savannah Energy.
In an unexpected act to protect its national interest, Chad announced that it will nationalize all assets and rights belonging to the multinational oil giant ExxonMobil, including hydrocarbon permits and exploration and production authorizations, according to news agencies.
The property to be nationalized is owned by a subsidiary of ExxonMobil, XOM.N. The Chadian government stressed that the order must be put into practice with haste.
“The finance and budget miinster must make sure the said decree is implemented form the date of its publishing,” remarked Haliki Choua Mahamat, the government’s general secretary.
Chad commenced the production of oil in 2003, but ExxonMobil has been in the country for many decades.
In Decembver 2022, ExxonMobil said that it had closed the sale of its operations in Chad and Cameroon to the London-listed Savannah Energy in a $407 million deal – but Chad opposed the transaction saying that the final terms of the agreement were divergent from what Exxon had initially presented.
Chad warned that it may approach the courts to block Savannah’s purchase of ExxonMobil’s assets in the country, and that it would take all the necessary steps to secure and protect its national interests.
ExxonMobil was running Chad’s Doba oil project where it had a 40% stake. This comprised seven producing oilfields with a combined output of 28,000 barrels per day according top Reuters. Exxon also had an interest in the Chad/Cameroon pipeline which stretches for more than 1,000 kilometres (621 miles).
The nationalization of private foreign capital has been on the low since the turn of the century, a significant feature of global capitalism’s triumph. Nationalizations were much more common in the period following the attainment of political independence by third world countries, particularly in the 1960s and 1970s.
Given the nature of international legal frameworks (or international law) specifically designed to protect the interests of industrially developed countries and their gigantic corporations, nationalizations are now widely frowned upon as an infringement of [private] property rights, and as something that “scares away investors”.
At a time when the demand for fossil fuel energy is at an all-time high, and contributing heavily to the rise in climate change, the narratives should now shift towards investing (primarily for the benefit of all peoples of the earth) in alternative renewable energy sources.
According to Reuters, both ExxonMobil and Savannah Energy were not available for comment. And as per the Associated Press, “energy experts” are strongly opposed to “expropriation without compensation”, and warn that this may “erode investor confidence”. They stress that African governments “need to play by the rules”.