London, UK | – A disputed debt restructuring plan is leading Chad to reconsider its oil supply deal with Swiss trader Glencore, according to a new report by Reuters.
Government documents show Chad is keen on handing over the $1.4 billion oil marketing contract to ExxonMobil, which produces the most oil in the country.
Sources close to the matter on behalf of Glencore believe the contract cannot be handed over as planned.
Heavy pressure from the International Monetary Fund (IMF) has caused the African nation to renegotiate the terms of external debt, which is owed mostly to Glencore. The costs of maintaining that debt costs the country over half of its oil profits.
The oil crash of 2014 has exacerbated the issue, making this the second time Chad has sought to restructure its debt since prices fell three years ago. A drought, a refugee crisis, and an ongoing conflict with Boko Haram has added pressure on Chad’s government. Glencore’s restructuring deal has “frustrated” the nation so far.
But Exxon’s relationship with Chad has not been perfect either.
The High Court of Chad ruled earlier this year that an Exxon-led consortium must pay a fine of $74 billion for failing to meet its tax obligations and withholding royalties worth $819 million.
The sum is a lot higher than Chad’s GDP, which was US$10.8 billion last year and is estimated to reach US$13 billion this year. The chance of the country collecting what it believes are its dues is beyond remote.
The company entered the central African country in 2001, and two years later struck oil. The current daily production rate is about 120,000 barrels, much of which is being exported via a pipeline through neighbouring Cameroon to the West African coast.
An Exxon spokesman said, “We disagree with the Chadian court’s ruling and are evaluating next steps. This dispute relates to disagreement over commitments made by the government to the consortium, not the government’s ability to impose taxes.”