Chad ordered United States energy giant Chevron and Malaysia’s Petronas on Saturday to leave the country within 24 hours for failing to honour tax obligations, a move apparently aimed at increasing control over its oil output.
”From tomorrow [Sunday] , the representatives of Chevron and Petronas must leave Chad and close their offices,” President Idriss Déby told a government meeting.
The companies had been asked this month to honour corporate tax obligations. ”Unfortunately, the government has received no reaction from the two partners,” Déby said.
The surprise move followed Chad’s decision to create a new national oil company which it said should become a partner in the country’s existing oil-producing consortium, led by US major Exxon Mobil and including Chevron and Petronas.
Petronas holds 35% of the consortium, Chevron 25%, and Exxon the remaining 40%.
”Chad with Exxon will manage its oil while waiting to find a solution with the two other partners,” Déby said.
Landlocked Chad, which began pumping crude in 2003, produces around 160 000-170 000 bpd but most of its people remain poor.
Industry experts said Déby’s government was clearly anxious to carve out a more advantageous position as Chad’s oil production, which began in 2003, continued to expand.
”Chad must get involved in the production of its oil to control its wealth and develop and increase its participation in the [consortium] pipeline,” Déby said, referring to a 250 000 barrels per day pipeline to the Cameroon coast.
Under the 1988 agreement with the foreign consortium, Chad gets 12,5% of the wellhead value of total production, before quality discount and the cost of sending it through the pipeline to Cameroon’s Kribi terminal.
”In less than three years of exploitation, the consortium has earned $5-billion for a $3-billion investment. In contrast, Chad has just received crumbs: $588-million,” Déby said.
Shifting allegiances
The move came on the heels of Chad’s shift of diplomatic relations from Taiwan to China, a major oil investor in neighbouring Sudan. Chadian officials have said they would welcome Chinese investment in the oil sector.
”This is essentially why they’ve decided to expel Petronas and Chevron, so that Chinese companies can come in,” said Gilbert Maoundonodji, head of an independent Chadian group, Gramp-TC, which is monitoring Chad’s oil project.
California-based Chevron said in a brief statement the company had ”not received any official notification from the Republic of Chad government asking Chevron to leave the country over tax issues. However, Chevron has been in full compliance with all of our tax obligations.”
A spokesperson for Petronas said: ”We have not received any official notification on the matter. We are trying to get more information.”
The current and former ministers who had handled Chad’s oil negotiations are being dismissed. They would answer before the courts on charges they had sent letters to the two foreign oil firms advising them not to pay the taxes, Déby said.
Déby, who needs increased oil revenues to tackle poverty and a security threat from eastern rebels, has called the original 1988 oil development deal ”a fool’s agreement” and called for its renegotiation.
His government has threatened the country’s oil partners before. In April it said it would stop oil production completely unless the World Bank unlocked an oil revenue account frozen in a dispute over how it spent its oil profits.
Chad — ranked by a Transparency International survey last year as the world’s most corrupt state — later backed away from the threat and the dispute was resolved. – Reuters