Chad Administrative court fined oil consortium lead by Exxon with 74 billion USD

Exxon Chad-Cameroon terminalChad’s Administrative court in N’Djamena fined consortium of oil companies ExxonMobil, Petronas and Chevron with 74 billion USD for violation of the country’s tax obligations. The oil and gas consortium operated 1,000-km pipeline, which transfering the crude from Chad to the oil terminal in Cameroon for export. The dispute concerns alleged unpaid royalties by the companies to the local government. ExxonMobil already sold its stake from the consortium to the government of Chad for 1.3 billion USD in 2014, when the daily production of crude oil in Chad amounted to 120,000 barrels per day. However, Petronas remained as investor and continue to have interest in the African country.

“We disagree with the Chadian court’s ruling and are evaluating next steps”, said the Exxon Mobil spokesman. “The dispute was over commitments made by the government to the consortium, not the government’s ability to impose taxes. It is vital for all sides to abide by applicable law in order to achieve the desired long-term benefits envisioned when projects begin”, added he.

Interesting is that the fines are equivalent to more than five times Chad’s gross domestic product and larger than the total cost to BP of the Deepwater Horizon disaster.

The Chad/Cameroon project of Exxon included wells in Chad and a pipeline to take the oil from the landlocked central African country to a terminal on the Atlantic coast of Cameroon.