Chad chevron and petronas resolve tax dispute

Chad, Oil Companies Resolve Tax Dispute
Chad News 10/11/2006
Chad and oil giants Chevron Corp. www.chevron.com and Petronas www.petronas.com.my have resolved a month-old dispute over taxes, officials said.

In a memorandum signed, the two companies agreed to pay $289 million in taxes once the Cabinet endorses the new memorandum, Oil Minister Emmanuel Nadingar said.

Finance Minister Abbas Mahamat Tolli and Frederick Neilson, Chevron's Africa Director, representing the two companies, signed the memorandum, which amends an earlier agreements on tax breaks.

On Aug. 26, President Idriss Deby gave the two companies, which are part of the African country's oil production consortium that is led by Exxon Mobil, 24 hours to leave Chad.

Deby said that they had not paid $450 million in taxes and his country would assume responsibility for their oil production.

Nadingar said that both parties negotiated the tax bill Deby claimed down to the $289 million figure.

California-based Chevron Corp. and Malaysia's Petronas do not have staff based in Chad and have delegated to Exxon Mobil the responsibility of managing the day-to-day affairs of the consortium in Chad.

Houston-based Exxon Mobil holds 40 percent of the consortium, Petronas 35 percent and Chevron 25 percent.

The memorandum re-establishes "the partnership between the Chadian government, Chevron and Petronas," said Tolli, after signing the document.

Neilson said that with the memorandum they had closed a difficult chapter.

"I hope that in the future we won't have such disputes," he said.

In 2000, the three companies agreed to finance a risky $4.2 billion, 663-mile pipeline to deliver oil from landlocked Chad to the Atlantic port of Kribi in Cameroon after the World Bank gave the project its blessing.

The World Bank agreed to the project when Chad passed an oil revenues law that required most of the money the government earned to be allocated to health, education and infrastructure projects.

Chad began producing oil in October 2003, and up to December 2005 the consortium had exported some 133 million barrels of oil from Chad, according to information compiled by the World Bank.

The Chadian treasury earned $307 million, or about 12.5 percent, on each barrel exported.