CHAD GEARING UP FOR OIL CONVENTION NEGOTIATIONS

UNCLAS NDJAMENA 001316 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 EPET CD SUBJECT: CHAD GEARING UP FOR OIL CONVENTION NEGOTIATIONS ¶1. (SBU) SUMMARY: The GOC is continuing to develop its gameplan for the country's upcoming negotiations with the oil consortium, according to Chad's petroleum minister. The Government believes that the country should have a greater stake in Chad's petroleum production, and will insist on greater participation in the production and sale of the country's oil. The Minister has already traveled to Algeria to look at the country's oil sector, and will travel to other African oil-producing countries in the coming weeks to explore the possibility of technical assistance for Chad's new national oil company. END SUMMARY. - - - - - - - - - - - - - PREPARING FOR NEGOTIATIONS - - - - - - - - - - - - - ¶2. (SBU) In November 7, Chadian Minister of Petroleum Emmanuel Nadingar told the Ambassador that the GOC is still in the preparatory stages of its plans to renegotiate the country's oil convention with the consortium. Chadian technical experts were compiling the necessary information to present the GOC case for renegotiation, and the benefit of altering the Convention to allow the GOC to have a share in the oil production process. Nadingar also said that the technical experts were working hard to identify specific areas of the convention that required a review and reevaluation, so as to clarify commercial arrangements between the GOC and the oil consortium. According to the Petroleum Minister, this issue was one of many that needed a formal review in the context of the Convention negotiations. - - - - - - - - - - - - - - - - - - CHAD SHOULD HELP PRODUCE ITS OWN OIL - - - - - - - - - - - - - - - - - - ¶3. (SBU) Nadingar stated that the GOC still felt that Chad should have a stake in the production and sale of the country's oil. The current convention, he argued, did not offer the Chadian people the maximum level of benefits it could receive from the country's oil. He added that poverty alleviation could only take place if Chad had a production sharing arrangement that meant a long-term receipt of petroleum revenues. The Ambassador noted that the current arrangement between Chad and the oil consortium, in which Chad received 12.5 percent of revenues in the form of royalty payments and 60 percent income tax payments, was a good deal for the Chadians. The Minister responded by saying the tax arrangement was only beneficial for Chad in a high price environment. He said that the GOC was seeking an arrangement that did not make Chad's benefits conditional on a higher than average price of oil per barrel. The Ambassador expressed hope that discussions on the terms of the convention could be pursued cooperatively without recourse to the confrontational tactics the GOC had used in its recent dealings with the consortium. - - - - - - - - - - - - - - - - - - - - - - - - TECHNICAL ASSISTANCE FOR A NATIONAL OIL COMPANY - - - - - - - - - - - - - - - - - - - - - - - - ¶4. (SBU) Nadingar also said the GOC was actively consulting with African neighbors who had already developed national oil companies. Nadingar hiself had traveled to Algeria to meet the countrys oil minister, and toured the country's refinery and training institute. He noted that he informaly discussed the possibility of Algerian assistane for the development of Chad's national oil comany. Nadignar said that he had also traveled toCameroon to meet with officials from Cameroon's ational oil company, Socit Nationale des Hydrocarbures, and would arrange to go to Congo-Brazzaville in the near future. WALL