Idriss Deby of Chad Orders Foreign Oil Firms Out

Chad News 8-26-2006

Chad has ordered two major foreign oil firms to leave the country on Sunday in a row over taxes.

President Idriss Deby gave the order two US firms ChevronTexaco www.chevron.com  and Malaysia's Petronas www.petronas.com.my after deciding on Saturday.

"Chad has decided that as of tomorrow ChevronTexaco and Petronas must leave Chad because they have refused to pay their taxes," Mr Deby said.

There was no immediate comment from the two firms, which are responsible for handling 60% of Chad's production.

The decision leaves only Exxon Mobil remaining in the consortium which handles the country's oil production.

President Deby said his government would take control of the remaining reserves.

The surprise decision has sent shock waves around the oil industry.

The government has recently been hinting it wants to join the consortium.

Privately, many observers feel the firms may have been kicked out to make room for Chinese oil companies, she adds - just three weeks ago, Chad resumed diplomatic relations with Beijing.

If this proves to be true, it will mark a turning point for geo-political relations in this region, our correspondent says.

History of rows

Rows surrounding Chad's oil revenues have been simmering for months.

Earlier this year, Chad threatened to stop oil production if it did not immediately receive several months' worth of oil revenues from the US-led consortium.

And last December the government fell out with the World Bank, after it changed a law which controlled how oil revenues were spent.

The bank, which financially backs the oil project, repeatedly asked Chad not to change the law but it went ahead anyway.

In response, the bank froze all payments of oil revenues to the government.

That row was settled with a deal in July, under which Chad agreed to spend 70% of its oil revenues on development schemes, with 30% going into its overall budget.