EXXON VS CHAD: $74 BLN
BLOOMBERG wrote, Exxon Mobil Corp. is negotiating with Chad's government about a record $74 billion fine the oil company was told to pay last month by a court in the central African nation because of a dispute over royalties.
While the world's biggest oil producer by market value, valued at $360 billion, has appealed the Oct. 5 ruling by the High Court, the appeals court hearing has been delayed because of the talks, Thomas Dingamgoto, a lawyer for the company, said in an interview in the capital, N'Djamena.
The penalty exceeds the $61.6 billion financial blow BP Plc incurred after the Deepwater Horizon disaster in 2010 killed 11 rig workers and fouled the Gulf of Mexico with crude for months, and is more than 70 times larger than the $977.5 million Exxon was ordered to pay fishermen and other victims of the 1989 Valdez oil spill in Alaska.
The Chadian court imposed the fine after the Finance Ministry said a consortium led by Irving, Texas-based Exxon hadn't met tax obligations. The court also demanded the oil explorer pay $819 million in overdue royalties.
"This dispute relates to disagreement over commitments made by the government to the consortium, not the government's ability to impose taxes," Todd Spitler, an Exxon spokesman, said in an e-mailed statement. "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."
The penalty, almost six times Chad's gross domestic product, is in line with the customs code of a regional organization of which Chad is a member, the Economic and Monetary Community of Central African States, according to the government's general director of legal affairs, Fang Langou Operal.
The code stipulates that "in the event of fraudulent behavior, as is the case, the fine should amount to double the value of the object of the fraud," Operal said in an interview in N'Djamena late Monday. He declined to elaborate.
Chad says that the consortium should pay 2 percent in royalties on crude exports, even if Exxon argues that it signed a convention with the government in 2009 that set the royalties at 0.2 percent, according to Dingamgoto.
"That convention wasn't ratified by parliament and never signed by the head of state," Operal said.
Judicial workers including judges have been on strike for at least two weeks to protest a reduction of allowances, alongside medical staff and teachers. The government announced a series of austerity measures earlier this year to cope with a steep decline in oil income, which is its main source of foreign revenue.
Exxon began exploring Chad for crude in 2001 and has been pumping oil there since 2003. The company also operates a pipeline that hauls Chadian oil to a marine terminal in Cameroon for export. The two other companies named in the case are Chevron Corp. and Malaysia's state-owned Petroliam Nasional Bhd. Chevron sold its stake in Chad in 2014.
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IEA - For the third consecutive year, global energy investment declined, to USD 1.8 trillion (United States dollars) in 2017 – a fall of 2% in real terms. The power generation sector accounted for most of this decline, due to fewer additions of coal, hydro and nuclear power capacity, which more than offset increased investment in solar photovoltaics.
EIA - Crude oil production from the major US onshore regions is forecast to increase 143,000 b/d month-over-month in July from 7,327 to 7,470 thousand barrels/day , gas production to increase 1,066 million cubic feet/day from 69,466 to 70,532 million cubic feet/day .
U.S. FRB - Industrial production rose 0.6 percent in June after declining 0.5 percent in May. For the second quarter as a whole, industrial production advanced at an annual rate of 6.0 percent, its third consecutive quarterly increase. Manufacturing output moved up 0.8 percent in June.
U.S. DT - The sum total in May of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC inflow of $69.9 billion. Of this, net foreign private inflows were $58.8 billion, and net foreign official inflows were $11.1 billion.