London — Mining and commodity trader Glencore said Thursday it will shut in production at its oil fields in Chad due to "the disruptions to international mobility, transportation and supply chains" caused by the COVID-19 pandemic.
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Glencore said its PetroChad (Mangara) Limited subsidiary has taken steps to commence ceasing production at its Badila and Mangara oil fields. These fields have recently been producing around 10,000-14,000 b/d, according to S&P Global Platts estimates.
"The facilities at the fields will be secured and remain on care and maintenance while [the company] monitors the situation," the company said in a statement. "The transition to care and maintenance is expected to complete towards the end of April."
Oil from these fields feeds into a crude called Doba Blend, which is Chad's main export grade.
Doba Blend is a heavy sweet crude, making it very popular among global refineries, as it is a fuel oil-rich crude with a very low-sulfur content.
Doba production has also risen over the year with production averaging around 150,000 b/d, compared with levels of around 80,000 b/d six years ago. Oil from landlocked Chad is pumped via the Kome-Kribi (Doba) pipeline to the coast of Cameroon, where it loads at a terminal around 10 km offshore.
Glencore also produces oil from the Krim fields (Chad West), but it did not specify its output plans for this asset.
The company also has stakes in oil fields in Cameroon and Equatorial Guinea. In addition, the trader is an active player in the West African crude market and a regular marketer of Doba crude from the Kribi terminal in Cameroon.
Under a crude supply financing deal, Glencore provided $379 million to the Chad State National Oil Co. (SHT) last year to be repaid through future oil deliveries over 10 years.
According to press reports citing unnamed sources in June, Glencore put its oil business up for sale to help support a share buyback program by selling non-core assets. The oil business was acquired five years ago.
Last year, Glencore said its exploration licenses in Chad East expired and the company failed to agree on a license extension with the government. As a result, Glencore took a $538 million impairment charge resulting from the expensing of historical cost allocations to licenses acquired via Caracal in 2014.
Glencore has always said that the expiry of the exploration licenses will have no impact on Glencore's current production and development assets in the Chad.