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Chad Government Makes Deal with Exxon

Africa Intelligence
Since the Doba field came on stream in 2003, Exxon Mobil, the fieldís operator, has been selling all of Chad's share of production, or 175,000 bpd. For some years N'Djamena has been clamoring in vain for the country to be able to sell at least part of the crude. Africa Energy Intelligence understands that negotiations were held in Houston between March 15-17 between a delegation from Chad and officials from Exxon Mobil, including the group's boss, Rex Tillerson. The Chadian side's argument was accepted and N'Djamena will henceforth be able to sell some 40,000 bpd - or a quarter of the field's total production - directly on the market. The move signals new opportunities for traders. Starting from July 1, the Societe d'Hydrocarbures du Tchad (SHT) will have rights to sell the 40,000 bpd through trading companies. ExxonMobil also agreed to increase royalties paid to Chad from 17.5% to 19.5%. The latter measure will take effect in 2009 on condition the oil price remains above USD 70 per barrel for six consecutive months; otherwise, the new rate will be applied from Jan. 1, 2010 at latest. Chad decided to negotiate with Exxon at a moment when the market is relatively unfavorable to producer countries because of the low price (USD 40/45 per barrel). Even so, Chad president Idriss Deby is presently under strong pressure from rebels in eastern Chad led by Timan Erdimi. As for Exxon, the fact it bowed to Chad's demands without blinking can be attributed in part to a tacit agreement with N'Djamena that it will be granted new permits (and Guera in particular) and consulted when new companies set up shop in Chad. Already in 2005, Exxon informally made the departure of Petronas from Chad a condition of a 5% rise in royalties.
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