Savannah Energy squares up to Chad
APRIL 11, 2023
By: Robert Li
Following the African country’s government’s nationalisation of assets which Savannah Energy had acquired only months previously, the two parties are on a collision course at the ICC for a second time. An energy row has escalated as the government of Chad has nationalised substantial privately owned upstream oil and gas assets in the country, effective 23 March. Bracewell is acting for UK-listed and Africa-focused Savannah Energy on the dispute, having previously advised on the original acquisition, while Chadian firm Kreich Avocats is advising Chad, according to reports. On 13 December 2021 Savanna published a statement that it had executed a share-acquisition contract agreeing to acquire ExxonMobil’s shares in the Doba basin oil project in Chad via a USD 407 million deal, which included interests in seven oil fields and a significant ownership stake in the Chad-Cameroon pipeline. That transaction closed on 9 December last year. Barely four days after the closing, and in the wake of growing government concerns about the transaction, Savannah released another statement asserting that the acquisition “was conducted in full conformity with the requirements of the governing documents and the applicable law”, while also announcing the mutual termination of an agreement to acquire upstream and midstream assets in Chad and Cameroon from Petronas. Savannah invoked an emergency arbitration procedure under ICC International Court of Arbitration (ICC) rules to protect its interests, with the emergency arbitrator finding in its favour in January. Chad responded on 23 March by nationalising the assets. A day later Savannah issued a statement that Chad’s actions “are in direct breach of the conventions to which [we and the government] are, amongst others, party” and signalled that “the company intends to pursue all of its legal rights” via further ICC proceedings. It added that the nationalisation has occurred “notwithstanding the fact that under [Savannah]’s operatorship the historic production decline was immediately reversed, with daily production averaging 29,349 barrels per day since 9 December 2022, an increase of circa 9% as against the equivalent period prior to Savannah taking control of [the assets]”, and that it had already commenced a development strategy to ramp up production. Bracewell and Kreich Avocats were approached for comment, but had not responded at the time of publication. In October 2020 the International Centre for Settlement of Investment Disputes (ICSID) proceedings of Interocean Oil Development Company and Interocean Oil Exploration Company v Nigeria saw the respondent awarded costs in an alleged oil and gas assets expropriation dispute.
Source: African Law & Business