London — The death of Chad's President Idriss Déby is likely to trigger political instability in the key oil-producing country and the wider central African region, with a potential impact on its oil sector, industry sources said April 20.
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An army spokesman confirmed April 20 that Déby had died while defending "territorial integrity on the battlefield" in clashes with the country's northern rebels.
Chad is the 10th-largest producer in Africa, pumping around 140,000 b/d, most of which is exported. Chad's oil is pumped from landlocked Chad through a 1,050-kilometer (650-mile) pipeline across Cameroon to the Kome Kribi-1 floating storage and offloading facility.
"It may be unclear yet what kind of impact this will ultimately have on crude output, the ensuing instability and potential security problems do raise the risks," said Sami Yahya, Senior Energy Analyst at S&P Global Platts Analytics. "It is likely things could get volatile."
Use of oil resources at issue
The oil producer had just completed elections earlier in the month, and Déby was expected to enter a sixth term in the office. Déby had ruled the country since 1990, when he came into power in a coup. His government had come under pressure over the management of Chad's oil resources.
"Déby's inability to turn billions of dollars in oil revenue accumulated since Chad started exporting its production through a World Bank-financed oil pipeline has emerged as a particular sore point for any Chadian not a part of Déby's Zaghawa tribe, who have benefited the most from the corrupt patronage system that oil wealth has created," the Atlantic Council said in a report April 20.
Déby had been working with France and other Western allies in a battle against Islamic militants in the Sahel region of Africa, which was mainly centered in the north of the country. It shares borders with key oil producers such as Nigeria, Libya, Sudan and Cameroon, along with Niger and the Central African Republic.
The Atlantic Council had said that Déby's fall would send shock waves from the Red Sea to the Atlantic, affecting the multinational G-5 Sahel initiative.
Huge debt burden
Despite its oil wealth, Chad has been facing an enormous debt burden. Global Commodity trading house Glencore is one of the largest creditors to Chad through an oil-for-cash loan. Last year, the Chadian government requested that Glencore suspend payments on its oil-for-cash loan. The oil producer now also relies on oil-for-cash loadings from Chinese creditors.
Chad holds around 1.5 billion barrels of proven oil reserves, according to BP's Energy Outlook 2020, making it the 10th-largest oil reserve holder in Africa. Oil accounts for almost 90% of the country's export revenues.
Output peaked in 2005
Chadian crude output peaked in 2005 at around 170,000 b/d, then declined to 80,000 b/d in 2013, according to Platts estimates. Production has averaged 140,000-150,000 b/d for the past three years.
The country's main export grade is Doba, a medium sweet crude. It has a geographically diverse customer base and has been exported to countries including Taiwan, Italy, France, the UAE, the UK, India, the US and Japan.
Doba, with a gravity of 28.50 API and a sulfur content of 0.07%, is known in the market for yielding a large percentage of low sulfur vacuum gasoil, fuel oil and residue. Doba's acidity levels have almost halved over the past few years, triggered by the inclusion of lower-acidity output in the crude stream after the startup of new fields.
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