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Chad orders Chevron out of the country

judasmachine

judasmachine

Diamond Member
Text

It appears Chevron didn't honor Chad's new tax laws. Malaysia's Petronas was also booted for the same reason. This new resource nationalism is at the heart of these new tensions IMHO.
 
Under the 1988 agreement with the foreign consortium, Chad gets 12.5 percent of the wellhead value of total production, before quality discount and the cost of sending it through the pipeline to Cameroon's Kribi terminal.

"Despite the rise in the price of a barrel, now estimated at around $70, Chad doesn't get much from its oil revenues," Deby told the meeting with government ministers and political parties.

"In less than three years of exploitation the consortium has earned $5 billion for a $3 billion investment. In contrast, Chad has just received crumbs: $588 million, just 12.5 percent."
Click to expand...

And the problem is???
 
The problem is that unlike the old days of cheap oil . . . getting a small cut (12.5%) of small revenue is better than nothing. Getting a small cut of HUGE revenue is dumb . . . particularly when that resource is just about all your country has of value.
 
Originally posted by: beyoku
Good for Chad, good for Africa. I hope Nigeria is next.
Click to expand...

Chad was recently found to be the most corrupt country in the world. Good for them, I'm sure they're going to be spending the money they make on schools and hospitals, not palaces and riches for their rulers...
 
Hey, maybe we can seed a new refinery in production by swinging a deal to supply it directly with them!
 
Originally posted by: senseamp
Under the 1988 agreement with the foreign consortium, Chad gets 12.5 percent of the wellhead value of total production, before quality discount and the cost of sending it through the pipeline to Cameroon's Kribi terminal.

"Despite the rise in the price of a barrel, now estimated at around $70, Chad doesn't get much from its oil revenues," Deby told the meeting with government ministers and political parties.

"In less than three years of exploitation the consortium has earned $5 billion for a $3 billion investment. In contrast, Chad has just received crumbs: $588 million, just 12.5 percent."
Click to expand...

And the problem is???
Click to expand...


I think they realized they're getting screwed now that crude is $70 a barrel. I'm sure chevron and exxon figured in the risk in 3bil investment in a developing country with corrupted gov't and non-existant corporate law...hence the 12.5% cut.

What I would wonder is how come nothing has changed after the '88 agreement that increased their nominal GDP by 10%... kinda makes you wonder where the money went.
 
Originally posted by: ntdz
Originally posted by: beyoku
Good for Chad, good for Africa. I hope Nigeria is next.
Click to expand...

Chad was recently found to be the most corrupt country in the world. Good for them, I'm sure they're going to be spending the money they make on schools and hospitals, not palaces and riches for their rulers...
Click to expand...

Which is why I say we invade and take over all the corrupt Nations for what they are corrupt Oil Barons.

Not invade under false nefarious pretense of WMD or liberating people that don't want to be liberated.
 
Originally posted by: ntdz
Originally posted by: beyoku
Good for Chad, good for Africa. I hope Nigeria is next.
Click to expand...

Chad was recently found to be the most corrupt country in the world. Good for them, I'm sure they're going to be spending the money they make on schools and hospitals, not palaces and riches for their rulers...
Click to expand...

QFT
 
So the companies they threw out what the government decided were TAX CHEATS?

Chad ordered U.S. energy giant Chevron and Malaysia's Petronas on Saturday to leave the country within 24 hours for failing to honor tax obligations.
 
Originally posted by: CaptnKirk
So the companies they threw out what the government decided were TAX CHEATS?

Chad ordered U.S. energy giant Chevron and Malaysia's Petronas on Saturday to leave the country within 24 hours for failing to honor tax obligations.
Click to expand...

No, they threw them out because the country wants more money basically. If you read the whole article it says that the secretary in charge of revenue told the companies not to pay it and he was fired. It also gives the numbers as has been posted earlier and lo and behold, they held up their end of the agreement.
 
Originally posted by: LEDominator
Originally posted by: CaptnKirk
So the companies they threw out what the government decided were TAX CHEATS?

Chad ordered U.S. energy giant Chevron and Malaysia's Petronas on Saturday to leave the country within 24 hours for failing to honor tax obligations.
Click to expand...

No, they threw them out because the country wants more money basically. If you read the whole article it says that the secretary in charge of revenue told the companies not to pay it and he was fired. It also gives the numbers as has been posted earlier and lo and behold, they held up their end of the agreement.
Click to expand...


You just keep on supporting the TAX CHEATS - OK?

Deby said the government had asked Chevron and Petronas this month to honor corporate tax obligations in their contracts.

"Unfortunately the government has received no reaction from the two partners," Deby said.

 
Originally posted by: CaptnKirk
Originally posted by: LEDominator
Originally posted by: CaptnKirk
So the companies they threw out what the government decided were TAX CHEATS?

Chad ordered U.S. energy giant Chevron and Malaysia's Petronas on Saturday to leave the country within 24 hours for failing to honor tax obligations.
Click to expand...

No, they threw them out because the country wants more money basically. If you read the whole article it says that the secretary in charge of revenue told the companies not to pay it and he was fired. It also gives the numbers as has been posted earlier and lo and behold, they held up their end of the agreement.
Click to expand...


You just keep on supporting the TAX CHEATS - OK?

Deby said the government had asked Chevron and Petronas this month to honor corporate tax obligations in their contracts.

"Unfortunately the government has received no reaction from the two partners," Deby said.
Click to expand...

I never said I supported oil companies. What I don't support is countries changing the terms of a contract and trying to force it on others. Sure you quote that, but a few lines down

The current and former ministers who had handled Chad's oil negotiations are being dismissed. They would answer before the courts on charges they had sent letters to the two foreign oil firms advising them not to pay the taxes, Deby said.
Click to expand...

Under the 1988 agreement with the foreign consortium, Chad gets 12.5 percent of the wellhead value of total production, before quality discount and the cost of sending it through the pipeline to Cameroon's Kribi terminal.
Click to expand...

"In less than three years of exploitation the consortium has earned $5 billion for a $3 billion investment. In contrast, Chad has just received crumbs: $588 million, just 12.5 percent."
Click to expand...

You need to READ the whole article.

They ARE probably raping the country, but to say they cheated on their taxes is a bit of a stretch. Although it'd be interesting to see the total profit for the companies in terms of cost from 1988 to the present offset by their profit. It'd probably be well short of 3 billion.
 
They ARE probably raping the country, but to say they cheated on their taxes is a bit of a stretch

The 'Polititians' can use whatever ruse they want to validate the nationalization of the companies that they want to acquire.

There just ain't a way to fight it.

Their 'weapon of choice' is to make the compaanies look like tax evaders to their countrymen,
even though the general population will not benefit much, if at all. The 'Polititians' will pocket the money & run . . same as always.
 
Originally posted by: CaptnKirk
They ARE probably raping the country, but to say they cheated on their taxes is a bit of a stretch

The 'Polititians' can use whatever ruse they want to validate the nationalization of the companies that they want to acquire.

There just ain't a way to fight it.

Their 'weapon of choice' is to make the compaanies look like tax evaders to their countrymen,
even though the general population will not benefit much, if at all. The 'Polititians' will pocket the money & run . . same as always.
Click to expand...

And that is why state-run corporations are no better than others 🙂 Except at least the shareholders of one company can expect some money whereas the state supposedly pays it back into the populace.

Bottom Line: The president of Chad is making a power grab. If he wanted to renegotiate it fine. There are ways of doing it, but it seems to me the guy is basically trying to strengthen his power hold and get more money to prop himself up.
 
Seems to me like they are living up to the deal they made, but now Chad wants to change the deal. Well, they are the ones who made the deal when oil was at $20, so now they have to live with it, even with oil at $70. Otherwise, who is going to invest in their country in the future if you can't benefit from the risks you take there.
 
Originally posted by: BaliBabyDoc
The problem is that unlike the old days of cheap oil . . . getting a small cut (12.5%) of small revenue is better than nothing. Getting a small cut of HUGE revenue is dumb . . . particularly when that resource is just about all your country has of value.
Click to expand...
Exactly how is a tax of 12.5% of the gross a "small cut"?? That's almost twice the oil companies' profit margins, even with today's $70/bbl. oil.
 
"In less than three years of exploitation the consortium has earned $5 billion for a $3 billion investment. In contrast, Chad has just received crumbs: $588 million, just 12.5 percent."
Click to expand...
Here's an interesting, very subtle, and perhaps unintentional way of spinning an article. "Chad had just received crumbs"?

The consortium's made a $2 billion gross profit so far and the country garnered more than 25% of that, am I correct? Some mighty large crumbs...
 
I find it kinda of hard to defend Chevron's POV on this one.

Who really thinks Chevron didn't BUY the officials that negotiated the first contract? Any contract signed with bribes and kickbacks isn't worth anything. I'm not saying the current government of Chad is going to be better but the internationals have two choices 1) hit the bricks or 2) pay the 'new' price of doing business in Chad.
 
This is a pretty big concession. 25% of gross profit... I find it hard to defend Chad. The guy is just trying to build his power and puff up his offshore account (I am guessing on the latter). The Oil companies are by no means angels, but it seems to me they gave a fair deal.
 
uhhhh, wait a second here... I'm confused about the cost of oil...
Okay, they invested 3 billion... they've made 5 billion... We can assume the cost of the equipment has been paid off...
Oil is $70 a barrel... Okay, Chad gets 12.5% of that, the oil companies get about 6% or so of that...

Who gets the other 80%+ of that??! I thought there were a lot of people here who were constantly claiming "supply and demand" - in that case, isn't the supplier who gets the additional money??

Or, to put it another way, the cost of oil is up, allegedly because of supply and demand issues. Let's compare:
Oil was $40 a barrel. Oil company get's (let's say 7.5% so I don't need a calculator) and Chad gets 12.5%. That amounts to $8 out of the $40 for the barrel. $32 goes somewhere else.. equipment? Labor? Transportation? Wherever.

Okay, now oil rises to (let's make it 80 to be easy)
Now, Oil company and Chad combine to get 20% again - $16 a barrel.
The other $64? Well, lets say that $32 goes to whatever it used to go to... Where's the additional $32 go to????????

When the price of oil goes up, who gets the extra money?? Apparently not the country, and every thread in P&N has claimed that the oil companies get the same percentage...
 
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