Petronas received Chad's 24-hour Expulsion Order

Bad news for Malaysia.

President Idriss Deby of Chad has ordered ordered Petronas and US energy giant Chevron to leave the country within 24 hours for failing to honour tax obligations. Oil experts said Chad wants to increase national control over its oil output. Deby has given Petronas and Chevron till tomorrow to close their offices and get out.

Until this expulsion order the international consortium that manages Chad’s oil wells was a partnership that comprises Exxon (40%), Chevron (25%) and Petronas (35%).

Well, Chad retains its dealings with Exxon to the disadvantage of the other two. President Deby stated: "Chad with Exxon will manage its oil while waiting to find a solution with the two other partners."

Chad claims it is not receiving a satisfactory share of the revenue from eth sales of its oil production. Under the 1988 agreement with the foreign consortium, Chad gets 12.5 per cent of the wellhead value of total production, before quality discount and the cost of sending it through the pipeline to Cameroon's Kribi terminal.

Deby lamented: "Despite the rise in the price of a barrel, now estimated at about $US70, Chad doesn't get much from its oil revenues."

"In less than three years of exploitation, the consortium has earned $US5 billion ($A6.6 billion) for a $US3 billion ($A4 billion) investment. In contrast, Chad has just received crumbs: $US588 million ($A774 million), just 12.5 per cent."

His government, listed by Transparency International as the world’s most corrupt state, has threatened Petronas and Chevron before. In April it said it would stop oil production completely unless the World Bank unlocked an oil revenue account frozen in a dispute over how it spent its oil profits. But it backed off that time.

Chad has also shifted diplomatic relationshsip from Taiwan to oil-thirsty China, which a major oil investor in neighbouring Sudan. Chadian officials said, threateningly to Petronas interest, that they would welcome Chinese investment in the oil sector.

Deby, who needs increased oil revenues to tackle poverty and a security threat from eastern rebels, has called the original 1988 oil development deal a ‘fool's agreement’. Obviously its expulsion order for Petronas and Chevron intends to force renegotiation of the original contract to improve its cut of the share.

He has sacked current and former ministers who had handled Chad's original oil negotiations. It seems those officials had also sent letters to Petronas and Chevron advising them not to pay the taxes. I suppose Exxon has cut its own deal with Deby.