Chad wants pipeline contract renegotiation
August 27, 2006 (LONDON) — Chad’s government has told the partners in the oil pipeline operated by Exxon Mobil Corp. (XOM) that it wants to renegotiate the contract of the project, a top official at the country’s president office said Sunday.
The statement comes after Chad President Idriss Deby said Saturday that Chad was giving 24 hours to the two other partners in the pipeline, Chevron Corp. (CVX) and Petronas, to pay what he said were undue taxes.
Deby accused the two companies of failing to pay $450 million in taxes as part of agreements signed by two previous government ministers and the current petroleum minister.
It was unclear Sunday how Chad might carry out the expulsion order.
The U.S. Energy information administration says Chad’s total oil output was almost 250,000 barrels a day in 2005, with some of that held back for domestic use. The export pipeline via Cameroon has a capacity of 225,000 b/d. Chad has oil reserves estimated at almost 1 billion barrels.
A Petronas official in Kuala Lumpur, Malaysia, said Sunday the firm hasn’t yet received notification of the expulsion order.
California-based Chevron, which produced about 40,000 barrel oil equivalent per day in 2005 in Chad, said through a spokesman it hadn’t been asked by the Chadian government to leave the country.
“Chevron hasn’t received any official notification from the Republic Of Chad asking Chevron to leave the country over tax issues. Chevron has been in full compliance with all our tax obligations,” he said.
An ExxonMobil spokesman said the company doesn’t discuss details of its business activities, but that recent events hadn’t affected its operations in Chad.
If the companies are evicted, Chad could turn for help to China, which is seeking deals with oil-producing countries in Africa and is heavily involved with Sudan, analysts say.
One expert in Chadian affairs, Paris-based political scientist Roland Marchal, said Deby is unlikely to go through with the expulsion.
“Deby is playing both the nationalist card because he is saying that foreign companies are taking Chad’s money, which is popular and also that if these two companies are not flexible enough to come to a new agreement where Chad receives more money then Deby can always talk to the Chinese.”
Speaking to Dow Jones Newswires, Dieudonne Djonabaye, director general of communications at Chad’s president’s office said “the government in an April correspondence indicated it wanted to renegotiate the pipeline’s contract (with all the partners including ExxonMobil) and was seeking the payments of taxes,” from Chevron and Petronas.
Djonabaye said the government was seeking 250 billion CFA francs ($506.16 million) in what he said were due taxes from Chevron and Petronas.
He said the government will ask for a stake in fields not covered in the pipeline contract, through a national hydrocarbons company which creation was voted in parliament in July.
Also Sunday, Oil Minister Mahmat Hassan Nasser, Planning Minister Mahmat Ali Hassan and Livestock Minister Mockhtar Moussa were reportedly suspended because they negotiated the terms of the agreements with U.S.-based Chevron and Malaysia’s Petroliam Nasional Bhd.
The ministers couldn’t be reached for confirmation.
(Dow Jones)