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Chad President Orders Chevron, Petronas to Leave - ASHARQ AL-AWSAT English Archive
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N’DJAMENA (Reuters) – Chad ordered U.S. energy giant Chevron and Malaysia’s Petronas on Saturday to leave the country within 24 hours for failing to honor tax obligations, a move apparently aimed at increasing control over its oil output.

“From tomorrow, the representatives of Chevron and Petronas must leave Chad and close their offices,” President Idriss Deby told a government meeting.

The companies had been asked this month to honor corporate tax obligations. “Unfortunately, the government has received no reaction from the two partners,” Deby 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 U.S. major Exxon Mobil (NYSE:XOM – news) and including Chevron and Petronas.

Petronas (PETR.UL) holds 35 percent of the consortium, Chevron (NYSE:CVX – news) 25 percent, and Exxon the remaining 40 percent.

“Chad with Exxon will manage its oil while waiting to find a solution with the two other partners,” Deby 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 Deby’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,” Deby 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 percent 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,” Deby said.

The move came on the heels of Chad’s shift of diplomatic relations from Taiwan to China, a major oil investor in neighboring 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 spokesman 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, Deby said.

Deby, 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 renegotiations.

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.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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