EVEN WITH AGREEMENT, CHEVRON STILL NOT OUT OF THE

UNCLAS SECTION 01 OF 02 NDJAMENA 001137 SIPDIS SIPDIS DEPT FOR AF, EB, ENERGY FOR CAROLYN GAY AND GEORGE PEARSON, TREASURY FOR OTA, LONDON AND PARIS FOR AFRICA WATCHERS, DAKAR FOR FCS REPRESENTATIVE CYNTHIA GRIFFITH GREENE E.O. 12958: N/A TAGS: ECON EFIN ENRG PGOV EPET CD SUBJECT: EVEN WITH AGREEMENT, CHEVRON STILL NOT OUT OF THE WOODS ¶1. SUMMARY: (SBU) Since the compromise between Chevron and the GOC following the meeting between CEO O'Reilly and President Deby, the company still faces significant obstacles before it can re-enter the Consortium. While Chevron has agreed to pay taxes proportional to the taxes paid by Exxon-Mobil in 2005, the GOC has demanded a tax payment from the GOC that is significantly higher than Chevron's own estimates. Chevron authorities are also unsure if they have permission from the GOC to even enter the country. END SUMMARY. - - - - - - - - - - - - - - - - - - - - - - DEBY AND O'REILLY REACH TENTATIVE AGREEMENT - - - - - - - - - - - - - - - - - - - - - - ¶2. (SBU) Details are emerging from the meeting between President Deby and Chevron CEO John O'Reilly that took place in Paris on September 7. During a meeting with DAS Yamamoto and Ambassador Wall on September 11, Esso Country Manager Ron Royal (who was in Paris prior to the Deby-O'Reilly meeting), said that prior to the meeting, Chevron hoped to seek a lifting of the suspension on its activities in Chad for 30 days to resolve the tax issue, and wanted to maintain the right to lift its crude oil in Cameroon. Petronas, the third member of the Consortium, appeared to have a more conciliatory approach. According to Royal, the Petronas executives hoped to resolve this issue diplomatically through a meeting between Chadian and Malaysian officials. They were also prepared to activate provisions in agreements among the consortium partners that would allow Exxon-Mobil to lift Petronas' share of the crude oil. ¶3. (SBU) Royal noted that while Chevron entered the negotiations with specific demands, they left the negotiations agreeing to the GOC's demand, which was to pay its taxes. Chevron contacts in Washington told Economic/Consular officer on September 13 that President Deby insisted during his meeting with O'Reilly that the suspension against the Consortium member would be lifted following the payment of taxes that were proportional to Exxon-Mobil's 2005 tax payments. They stated that O'Reilly agreed to Deby's demands, and said that Chevron would send a team to N'Djamena to make the necessary arrangements to pay the taxes. Immediately following the meeting, Chevron's auditing team convened to calculate the tax payment based on Esso's 2005 tax payment and Chevron's proportional representation in the Consortium. - - - - - - - - - - - - - - - - - BUT HOW MUCH ARE THE TAX PAYMENTS? - - - - - - - - - - - - - - - - - ¶4. (SBU) Chevron also told us that on September 11, the Chadian Ministry of Finance sent a tax assessment to Chevron's offices in Houston that cited a projected tax payment "significantly" higher than the payment calculated by the Chevron auditors. They also said that Chevron had so far been unable to contact GOC authorities to relay this discrepency, and would probably wait until the arrival of a team in N'Djamena on September 18 to discuss the issue directly with the GOC. They said that World Bank officials had suggested that Chevron officials arrange a meeting with Finance Minister Abbas Tolli, who is currently in Paris. Chevron would consider the meeting, but were more focused on meeting directly with GOC authorities when in N'Djamena. - - - - - - - - - - - - - - - - - AND CAN CHEVRON ENTER THE COUNTRY? - - - - - - - - - - - - - - - - - ¶5. (SBU) According to Chevron, the company will still unclear if its team could even enter the country. After all, while President Deby noted that the suspension would be lifted once taxes were paid, the continuation of the suspension meant that Chevron employees were not allowed into be in Chad. Chad's Embassy in Washington had told Chevron that their employees "were not welcome" at a reception hosted NDJAMENA 00001137 002 OF 002 by the Embassy in honor of the visit of First Lady Hinda Deby Itno to Washington. According to them, Chevron would still have to determine whether Chadian authorities would allow them even to enter the country. WALL