AFC leads $1.3bn facility for Chad oil deal

The transaction is part of the African DFI’s efforts to support the acquisition of infrastructure assets by indigenous entities.

The Africa Finance Corporation (AFC) has announced that it is the mandated lead arranger of a $1.305 billion pre-payment facility to help fund a transaction by Société des Hydrocarbures du Tchad (SHT), Chad’s national oil company.

The facility will be used by oil producer Glencore Energy UK to provide financing of up to $1.450 billion to SHT. The company will in turn use the funds to acquire Chevron Global Energy’s 25 percent stake in the Doba consortium, which owns and operates oil production and infrastructure assets in Chad.

These include the pipeline companies responsible for transporting crude oil to Cameroon for export. The consortium comprises ExxonMobil Corporation, Chevron, as well as Petroliam Nasional Berhad (Petronas); the field is operated by ExxonMobil.
AFC was one of the six mandated lead arrangers of the facility, which also included Crédit Agricole, Deutsche Bank, FBN Bank, Natixis, and Société Generale, with Citibank as the account bank. AFC contributed $100 million to the total financing.

The deal is part of AFC’s efforts to support the acquisition of assets by indigenous entities, in line with its broader objective of enhancing “local content, local ownership” in the natural resources sector across the African continent, it said in a statement.

The development finance institution was established in 2007 with an initial capital base of $1 billion, with a view to catalyse private sector infrastructure investment across Africa. The SHT transaction is AFC’s first in Chad, which joined the corporation as a member country in October 2012.

“This investment represents a continuation of our strategy to support the indigenisation of Africa’s oil and gas sector through the provision of finance for the acquisition, or development of assets by local entities,” said Andrew Alli, AFC’s president and chief executive.

The institution targets investments in the power, natural resources, heavy industry, transport and telecom core infrastructure sectors.