Exxon Mobil (NYSE:XOM) is in talks with Chad’s government regarding a huge US$74-billion fine it was ordered to pay last month by a Chad court for failing to meet tax obligations and withholding royalties, a lawyer for the company told Bloomberg in an interview on Tuesday.
Last month, the High Court of Chad ruled that an Exxon-led consortium pay the sum, which is much higher than the country’s GDP of US$10.8 billion last year.
Experts say the chance that Chad may collect what it believes are its dues is beyond remote.
Exxon has appealed the court ruling, but the appeals court hearing has been postponed because talks are being held, Bloomberg quoted Exxon lawyer Thomas Dingamgoto as saying.
According to the Chad government’s general director of legal affairs, Fang Langou Operal, the fine imposed on Exxon is compatible with a customs code of the Central African Economic and Monetary Community (CEMAC), of which Chad is a member.
Chad’s contention is that the Exxon-led consortium should pay 2 percent in royalties on crude exports, while Exxon has said it had a convention signed with the government to pay only 0.2 percent in royalties. Government official Operal, however, told Bloomberg today that the convention has not been either ratified by parliament or signed by the head of state.
Exxon 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 neighboring Cameroon to the West African coast.
Earlier this year, Exxon and its partners in the consortium, including Malaysian Petronas, filed a case at the International Court of Arbitration in Paris against the Chadian government, claiming their contract for oilfield development included an exemption from export taxes.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.