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Chevron’s acquisition of Noble could have a big impact on African projects

Chevron’s US$5 billion acquisition of Noble is expected to signal a new series of merger and acquisition agreements on offshore developments in Cameroon and Equatorial Guinea

Chevron’s announcement on 20 July that it plans to acquire Noble Energy in a deal valued at US$5 billion ushered in the largest merger and acquisition since the oil price crash.

The deal, involving all outstanding shares in Noble Energy at $10.38 a share, sent shockwaves across the oil sector. This is not only because of its size and the impact on markets from Texas to Equatorial Guinea, but also because it is expected to signal a new series of merger and acquisition agreements in the oil sector, Africa Oil and Gas reports.

In Africa, projects that could be affected by the merger include the Alen gas monetisation project in Equatorial Guinea, where Noble Energy made a final investment decision in 2019, with start-up planned for 2021. Also under revision may be movement on the Yolanda discovery in Block 1 offshore Equatorial Guinea and the Yoyo discovery offshore Cameroon, which the governments of the two countries agreed in a memorandum of understanding would be developed jointly.

The American independent also holds the operating interest in the Doukou Dak block in the South Gabon Basin, offshore Gabon.

Welcome to wildcats

“The deal raises a lot of questions, and a lot of issues need to be resolved,” said N J Ayuk, chairman of the African Energy Chamber.

“There are a lot of unknowns, including the impact on the Yoyo-Yolanda condensate gas field going on between Equatorial Guinea and Cameroon. Is Chevron either going to continue or abandon that? This is a key concern for both countries.”

A primary concern for the Chamber, Ayuk said, is how Chevron will carry forward progress on projects, prioritise local content policies and create new jobs.

“Noble Energy has struggled with local content and we hope Chevron can do better – integrate more Africans, more African women, and give the nationals true participation and true upward mobility in the projects,” he said.

“Is [the Noble acquisition] a good deal? I think that is for Noble and its shareholders to decide,” Ayuk said. “For us at the Chamber, we are more concerned with it being a good deal for Africans.

“And while the majors are welcome, at the moment, we need more wildcats, more independents to go after new projects with a lot of hunger, to create a resurgence of exploration activity in Africa.”

Weight of resource

According to Jude Kearney, co-managing director and co-founder at Sovereign Energy Group, the deal is a positive step in Equatorial Guinea’s progress.

“From my perspective as an advisor to Equatorial Guinea, clearly Chevron brings some goodwill and resources which can be brought to bear on its new partnership with the country,” said Kearney.

He said, “On the Backfill Project, no one had threatened to back down from the project or given any indication it wasn’t feasible. But having a company with the strength and capacity of Chevron as part of that equation is exceptionally helpful to the project and the region.”

Caty Hirst

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