Posted on 08/26/2006 4:12:24 PM PDT by thackney
N'DJAMENA, Aug 26 (Reuters) - Chad ordered U.S. 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, 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 honour 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 and including Chevron and Petronas.
Petronas holds 35 percent of the consortium, Chevron 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.
"Despite the rise in the price of a barrel, now estimated at around $70, Chad doesn't get much from its oil revenues," Deby told the meeting with ministers and political parties.
"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, just 12.5 percent."
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.
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 a security threat from eastern rebels and also poverty, 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.
Isn't Al Gore the "President of chad"?
Hope that gives them enough time to set the charges on the well heads and any other equipment of value.
Chad may be the gayest name for a country ever.
Connecting the dots is getting somewhat upsetting.
"Landlocked Chad, which began pumping crude in 2003, produces around 160,000-170,000 bpd but most of its people remain poor."
surprise surprise. Only in the media does anyone assume that government does not exist to enrich and empower itself and those who run it.
What are the odds.
Looks like China is involved behind the scenes.
well they are also probably following events in south america, with foreign oil multinationals having their contracts voided or re-written in a few countries. The tell on china will be whether any chinese state investment in chad's oil industry is announced in the next year or so.
Presumably the investors in a project like the one in chad price in eventual nationalization of their work. The major oils aren't any babes in the woods.
Red Storm Rising.
It sounds like Chad doesn't like the old 1/8th lease and wants a do-over. In the real world, Chad would simply offer to buy back in for a higher percentage.
That's the Real world. "Governments" don't operate in the Real World. They just take what they want. The Comanche Nation did the same thing around here. +8% with the wave of a hand. LOL .... there's a lot of that going around.
Connecting the dots is getting much easier. I think the Venezuelan model has teeth. State owned oil equals Communism at the worst, socialism at the best.
Second benefit is International political muscle...especially against the west.
If I was Chevron I would have hired an army and thrown the government out. I would bet every dollar spent to date to find this oil came from them and now they get dumped because China got someone in their pocket.
Chad? Where's Jeremy on this outrageous order?
more likely in chad's case is simple kleptocratism. I don't know chad politics, or if the crowd which doubtless got rich on bribes/graft when the contract was done in the first place is out of power now or not, but now that there is a viable and operating pipline with real revenues, obviously they are going to steal what they can.
Outside of north africa, as far as I can tell the vast majority of their governments are some of the worst examples of despotism, and the conditions for that to change simply don't exist. The foreign aid (read as Bribes) we give african governments and the loans we give then forgive are simply robbed. The most curious thing is Chinese investment in african natural resources in a number of countries. Wonder when we will see an african country nationalizing a chinese investment.
Whatever Chad received it was return on zero investment with zero risk, and they feel cheated. No wonder Africa is such a hopeless sh'thole.
Anther Nigeria in the making.
The BPD was a drop in the bucket, but who knows what the long term was on the find.
The private army idea has been tried and has had some success and some failure. The South Africans and Brits keeps a close eye on their folks in the business. The USA would come down hard on someone here. But that said there are folks out there today that could field a force that could take down a Chad in no time.
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