Chad+Petroleum

=China National Petroleum Corporation (CNPC) Likely to Remain a Stable Investor in Chad's Petroleum Sector Over The Next Five Years=

Executive Summary:
China National Petroleum Corporation (CNPC) is likely to keep a stable presence in Chad's petroleum sector. In January 2013, Chad ranked the tenth largest oil reserve holder among African countries, with 1.5 billion barrels of proven reserves. Since December 2003, CNPC has held shares in Chad's Block H, which covers the area of seven depositional basins: Chad Lake, Madiago, Bonger, Doba, Doseo, Salamat, and Erdis. In 2006, CNPC obtained all the equity of Block H and discovered new oil-yielding structures, which includes Baobab and Ronier-1 in the Bongor Basin of the block. CNPC and the Chadian government jointly constructed the 20,000 bbl/d N'Djamena refinery, and it began supplying the local market with petroleum products in 2011. Although, this refinery has temporarily been suspended various times for environmental and operational issues.

Discussion:
According to //Oil and Gas Journal//, as of Jan. 2013 Chad ranks as the tenth largest oil reserve holder among African countries with 1.5 billion barrels of proven reserves. Crude oil production was estimated 115,000 barrels per day in 2011, and 105,000 barrels per day in 2012, which almost all of this oil was exported through the Chad-Cameroon Pipeline. Chad has exported over 500 million barrels of crude oil, valued at over USD 10.2 billion, throughout the past ten years. In 2003, CNPC signed a USD 45 million agreement with Swiss company Cliveden to buy 50 percent shares for the exploration of Block H in Chad, which covers the area of seven depositional basins: Chad Lake, Madiago, Bonger, Doba, Doseo, Salamat, and Erdis.In 2006, EnCana Corporation sold all of its interests in its exploration assets in Chad to CNPC International (Chad) Ltd. for approximately USD 202.5 million. Pursuant to the agreement, CNPC purchased all of the shares of EnCana International (Chad) Ltd., which holds a 50 percent working interest in a Convention and Permit H which covers seven sedimentary basins. The effective date of this transaction is October 1, 2006. Therefore CNPC obtained all the equity of Block H and discovered new oil-nearing structures including Baobab and Ronier-1 in the Bongor Basin. Exploration well Ronier-1 encountered three sets of oil and gas formations of different grades, producing conventional crude oil for the first time. In 2009, progressive exploration in Ronier and Mimosa areas in the Bongor Basin resulted in the discovery of new reserves. Significant progress was also made in the exploration of Prosopis and Baobab. In 2010, CNPC made key exploration discoveries in Bongor Basin, and achieved successful formation test in risk exploration well Cassia N-1 deployed in the Naramay area of Block H, which yielded a 1,000 tons per day oil flow. In 2011, a hydrocarbon play was discovered at block H in Chad's Bongor Basin.In 2012, CNPC discovered the oil-rich Lanea block in the Bongor Basin and made important progress in lithologic reservoir exploration in Raphia region. In Dec. 2003, CNPC and the Chadian government jointly constructed the 20,000 billion barrels per day N'Djamena refinery at Djermaya and connecting pipeline, which began supplying the local market with petroleum products in 2011. This project cost an estimated USD 1 million, with CNPC having 60 percent of the shares and Chad with the remaining 40 percent. The first phase of this upstream and downstream integrated project includes the construction of the Ronier oilfield, the N'Djamena Refinery, and a 193 mile-long crude pipeline between the oilfield and the refinery. The pipeline is the first energy passage connecting north and south of Chad. N'djamena Refinery is the largest joint venture and industrial enterprise in Chad, also the second largest refinery built by CNPC overseas, mainly producing gasoline, diesel, fuel oil, LNG and polypropylene. Although, CNPC, was suspended in August 2013 due to "flagrant violations" of environmental standards while drilling for oil in the south of Chad. Suspensions have recently been lifted. Also,the Chadian government shut down their joint-venture refinery for several weeks in January 2012 in a row over the price of fuel for the local market.

** Analytic Confidence: **
Analytic confidence is medium. Source reliability ranges from medium to high. There is no conflict between sources. The analyst had low expertise on the subject, worked alone while also collaborating with a group, and did not use a structured analytic method. The subject is moderately complex and the deadline was moderately easy to meet.
 * Analyst:** RoseAnna Wright