Exxon in Talks to Resolve

Exxon in Talks to Resolve $100 Million Demand from Chad
Chad News 4/17/2006
After the government of Chad demanded $100 million from foreign oil companies, ExxonMobil www.exxonmobil.com announced Saturday it was leading talks with the Chad government and others to resolve the situation.

Chad demanded the payment from Exxon, Petronas www.petronas.com.my , and Chevron www.chevron.com after the World Bank froze oil profits in the war-torn nation. Chad has asked the companies to transfer funds directly into a state-owned account or face a halt in production.

The World Bank froze profits in a London escrow account and suspended loans to the country in January after Chad violated an agreement regarding spending of the money. In a prior agreement oil profits were earmarked for social services and savings for the time when Chad's small reserves will be depleted. The government broke its agreement by diverting funds to its military operations to fight increasing unrest by armed rebel groups.

Chad produces around 170,000 barrels of crude oil per day, a relatively small amount by global standards. Its oil is typically of low quality with high sulfur content. Despite these factors, the government is hoping that any perceived threat to global supplies, no matter how small, will jar oil companies into compliance. No company has said it will pay the demanded fees and Chad says it is still in talks with the World Bank regarding access to its assets.