Summary of Proposed Investment
Project Number
7621
Company Name
PECTEN CAMEROON COMPANY
Date SPI Disclosed
Jan 9, 1997
Country
Cameroon
Industry
Metals and Mining
Status
Completed
Sector
Oil and Gas Production (Includes Development)
Department
Gbl Infrastructure & Natural Resources
Environmental Category
B - Limited
Previous Events
Approved : Feb 14, 1997
Signed : Jun 20, 1997
Invested : Sep 10, 1997
Project Description
Summary Of Project Information (SPI)
| Project Name | Cameroon-Pecten Itindi |
| Region | Sub-Saharan Africa |
| Sector |
Projected Board DateFebruary 9, 1997
Company NamePecten Cameroon Company
Technical Partner and/or Major Shareholders
Pecten is 80% owned by Pecten International Company, a wholly owned subsidiary of Shell Oil Company. The remaining 20% is owned by Societe Nationale des Hydrocarbures (SNH), the Cameroonian national oil company.
Project Cost Including proposed IFC investment
The additional financing requirement will be US$115 million. It is proposed that IFC will provide some US$95 million, US$20 million for its own account and US$75 million for the account of participants.
Location of project and Description of site
The project is located in seven oil fields in the Rio del Rey Basin, offshore Cameroon.
Description of Company and Purpose of Project
Pecten and Elf Serepca (which is owned 20% by SNH and 80% by Elf Aquitaine) are joint operators in a number of concessions which account for over 95% of Cameroon''s oil production. The purpose of the Project is to improve recovery from mature fields by slowing down the production decline and thereby extending their useful economic life. In 1990, Pecten was able to arrange financing on the international markets, independently of IFC. Since then however, the international banking community has made it clear that it would no longer finance further development in Cameroon without IFC’s participation to mitigate perceived political risks. This continues to be the case today. At the same time, the proposed financing is vital to ensure the optimal exploitation of the Republic’s most important oilfields.
In order to avoid transfer pricing difficulties and because the Republic prefers not to pay its share of development expenses up-front, Pecten seeks financing for development expenditure through external debt. The Republic’s share of debt service is then reimbursed out of its share of oil revenues.
IFC intends to raise up to about 80% of the additional debt financing from external sources. With IFC as the catalyst, this Project will be able to mobilize significant funds in a country with a high level of perceived political risk.
Cameroon is sub-Saharan Africa’s fifth largest oil producer and oil accounts for a large proportion of government revenue. The direct benefits of this Project to Cameroon are considerable as the Republic receives a large proportion of after tax operating income from production, as well as dividends. The project will therefore generate a significant amount of additional foreign exchange earnings for the country. Oil remains of major importance to the economy and the full exploitation of the Republic’s reserves remains a major component of its continued economic development.
In order to address the decline in oil production which is expected as current reserves are fully exploited, the Republic has introduced measures to encourage private sector participation in the development of fields that are considered marginal. Measures have also been instituted to incentivize private sector entities to explore for new sources of exploitable reserves. Part of the development portion of the Project is directed at such marginal fields while the exploration portion will largely be directed at the so-called exploration incentive fields. The Project will thus support these initiatives by assisting in the stabilization of the Republic’s overall oil production profile.
Environmental Category and Issues
This is a category B Project according to IFC''s environmental review procedure. Environmental issues of potential concern with this project include the discharge of drilling muds and cuttings, treatment and disposal of produced water and other liquid effluents, gas flaring and oil spill contingency plans and response capability. Based on environmental monitoring reports and other information submitted by Pecten, IFC has concluded that the continued development of the fields is designed to meet World Bank environmental, health and safety policies and guidelines, and host country requirements.
The is from the Public Information Center.
| Host country location of environmental documents | International Finance Corporation, Rue Flatters, B.P. 4616, Doula, Cameroon |
Date SPI sent to PIC January 9, 1997
For Additional Information contact: Corporate Relations Unit -
telephone: (202) 473-7711
facsimile: (202) 676-0365
Environmental documents for this project are available at http://www.ifc.org and from the World Bank InfoShop (http://www.worldbank.org/html/pic/aboutinfo.html).
Sponsor / Cost / Location
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