ExxonMobil Corp. (NYSE: XOM) said on Oct. 6 it disagreed with a court decision in Chad that fined a consortium led by the company over 44 trillion CFA francs (US$75 billion) over unpaid royalties.
This amount is nearly 4x BP Plc's (NYSE: BP) record Deepwater Horizon settlement. The decision would see the central African nation awarded the equivalent of nearly 7x its annual GDP.
"We disagree with the Chadian court's ruling and are evaluating next steps," Exxon media adviser Todd Spitler said in an emailed response to a Reuters request for comment.
Malaysian state oil firm Petronas and Chadian oil company SNT, the two other consortium members, were not immediately reachable for comment.
The court judgment released on Oct. 7 found that the companies owed nearly 484 billion CFA francs in royalties to the Chadian government. It did not explain why the penalties amounted to more than 90x that amount.
The court document also stated that the companies were required to pay roughly US$670 million pending any eventual appeal or redress they might choose to pursue.
Officials from Chad's finance ministry and customs office declined to comment on the court decision, which resulted from a complaint brought by the ministry.
Sources in the finance ministry have previously said that the unpaid royalties stem from a dispute over fees. The finance ministry, they said, is seeking a 2% royalty fee from the consortium, a rate the defendants have said is higher than the agreed level.
"This dispute relates to disagreement over commitments made by the government to the consortium, not the government's ability to impose taxes," Spitler said. "It is vital for all parties to honor the terms of a contract and abide by applicable law in order to achieve the desired long-term benefits envisioned when projects begin," he said.
Chad became an oil producer in 2003 and produces about 120,000 barrels per day that it exports via pipeline through Cameroon.
Like many oil-dependent African nations, Chad has been hit hard by a drop in crude prices. Its economy is expected to contract by 1.1% in 2016, according to the International Monetary Fund.
(US$1 = 587.6700 CFA francs)
Recommended Reading
Baker Hughes Awarded Saudi Pipeline Technology Contract
2024-04-23 - Baker Hughes will supply centrifugal compressors for Saudi Arabia’s new pipeline system, which aims to increase gas distribution across the kingdom and reduce carbon emissions
President: Financial Debt for Mexico's Pemex Totaled $106.8B End of 2023
2024-02-21 - President Andres Manuel Lopez Obrador revealed the debt data in a chart from a presentation on Pemex at a government press conference.
TechnipFMC Eyes $30B in Subsea Orders by 2025
2024-02-23 - TechnipFMC is capitalizing on an industry shift in spending to offshore projects from land projects.
Patterson-UTI Braces for Activity ‘Pause’ After E&P Consolidations
2024-02-19 - Patterson-UTI saw net income rebound from 2022 and CEO Andy Hendricks says the company is well positioned following a wave of E&P consolidations that may slow activity.
ProPetro Reports Material Weakness in Financial Reporting Controls
2024-03-14 - ProPetro identified a material weakness in internal controls over financial reporting, the oilfield services firm said in a filing.