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U.S. Energy Storage Capacity Set To Double This Year

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U.S. grid-connected energy storage capacity…

Congo Looks To Renegotiate $2 Billion Debt To Oil Trading Firms

Congo crude

Congo Republic has appointed investment bank Lazard to help it renegotiate US$2 billion worth of debt to oil and commodity traders Trafigura and Glencore, as the African country seeks to bring its debt back to sustainable levels, Reuters reported on Tuesday, quoting banking and oil industry sources.

The world’s biggest oil trading firms often lend money to resource-rich but financially constrained countries when other creditors won’t provide loans. But the commodity traders often charge high interest rates and want access to the country’s natural resources.

Congo, which produces nearly 280,000 bpd of oil, depends heavily on revenues from oil sales and has seen its government finances stretched after the oil price crash of 2014.

The International Monetary Fund (IMF) said at the end of December 2017 that “Congo’s economy continues to suffer from the effects of low oil prices, unsustainable debt, and significant governance weaknesses,” and urged the government to restore debt sustainability, strengthen governance, and ensure adequate program financing, before a possible financial support by the IMF can be discussed.

As of the end of July 2017, Congo’s public debt was about US$9.14 billion, equal to some 110 percent of the country’s GDP, the IMF estimated in October.

Congo said the same month that its debt to oil traders was US$2.3 billion out of this total debt, and that it was considering a moratorium on payments to private creditors.

Related: Canada’s Oil Crisis Continues To Worsen

According to Reuters’ sources, Trafigura—together with banks—has provided US$1 billion worth of loans to Congo, while Glencore, with the backing of banks, has lent the country US$850 million in 2015 and 2016, to be repaid in oil deliveries over five years.

“All in all, we don’t think the government is in a desperate situation and requires a massive restructuring. Some sort of restructuring with a four to five-year timeframe would probably be acceptable,” a source at one of the trading houses told Reuters.

Meanwhile, new projects in Congo are expected to boost its oil production by 25 percent to 350,000 bpd this year.

By Tsvetana Paraskova for Oilprice.com

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