Identifier
Created
Classification
Origin
06NDJAMENA1137
2006-09-14 15:52:00
UNCLASSIFIED
Embassy Ndjamena
Cable title:  

EVEN WITH AGREEMENT, CHEVRON STILL NOT OUT OF THE

Tags:  ECON EFIN ENRG PGOV EPET CD 
pdf how-to read a cable
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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

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