Chad annuls CNPC licenses in dispute over $1.2 bn fine

8/8/2014

Chad annuls CNPC licenses in dispute over $1.2 bn fine

DANIEL N’DOH NADJITAN and PAULINE BAX

N’DJAMENA, Chad (Bloomberg) -- Chad withdrew the licenses of China National Petroleum Corp.’s local unit after saying the company failed to pay a $1.2 billion fine for environmental violations.

The government and oil exploration company failed to agree on the payment and the licenses were annulled, Ministry of Energy spokesman Bertin Djim said by phone today, Aug. 8.

“The Chinese say the fine is too high, they’ve proposed to pay on condition of leveraging it against oil output, which was refused by the authorities,” Djim said.

A presidential decree dated July 29 and published late yesterday said all five licenses of the CNPC unit had been revoked.

The government of the central African nation imposed the fine in March and two months later banned all exploration by the company. CNPC was guilty of “harmful practices” including “land-filling polluted sites” without treating them beforehand, according to Energy Minister Djerassem Le Bemadjiel.

Crude spills in southern Chad prompted the government to halt drilling by CNPC from August to October last year. CNPC has been operating in Chad since 2003 and owns 60% of an oil refinery in the capital, N’Djamena.

A person who answered the phone at the head office of CNPC in N’Djamena said he couldn’t immediately comment. He declined to give his name.

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