Sunday, August 27, 2006

Chad ousts US energy firm

(Source Article: Chad president orders Chevron out - CNN)

Chevron and Malaysia’s Petronas, both having oil interests in Chad, violated their tax obligations to the impoverished country and as a result the president ordered them to shut down their operations.

The country began producing around 170,000 barrels of oil per day in 2003, but most of its people live in impoverished conditions. The country’s government hopes to extract larger sums from the profits of companies like Chevron in order to increase its wealth. Currently, the country’s existing oil-producing consortium, led by U.S. based Exxon Mobil, has made US$5 billion on a $3 billion investment, but the country itself has seen only $588 million under an existing agreement with the consortium.

The abrupt decision to oust Chevron and Petronas follows the creation of Chad’s new national oil company; the president also urged the consortium to include the national company in its membership and operations. Before being ousted, Chevron and Petronas held 35 and 25 percent of the consortium, respectively, with Exxon holding 40 percent. Now, Chad and Exxon alone will manage the country’s oil – presumably until a solution is found for the problem existing between the country and the other two companies. (see Chad president orders Chevron, Petronas to leave - Reuters

While the government’s stated motive for desiring increased revenues from oil is to improve the condition of its people, its history casts understandable skepticism on that notion: last year a survey by Transparency International ranked corruption in Chad as the worst in the world.

No comments: