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Chad 'Nationalizes' Petro Operation

FILE: FILE - This July 6, 2006 file photo shows a representative illustration of an oil refinery in operation.
FILE: FILE - This July 6, 2006 file photo shows a representative illustration of an oil refinery in operation.

N'DJAMENA - Chad has announced it has nationalized a former subsidiary of US oil and gas giant ExxonMobil, whose sale to a British company last year it had contested.

A decree signed by Chad's president, Mahamat Idriss Deby Itno, on Thursday declared that all the assets, prospection rights, operating permits and oil-transport authorizations held by Esso Exploration and Production Chad Inc. "are nationalized".

The firm's sale to Savannah Energy plc had been announced by the UK firm on December 9.

Chad had immediately contested the sale, saying it had gone ahead despite the government's "express objections" and in violation of its right of first refusal.

The company holds concessions in a number of productive fields, as well as rights over oil extracted there and a share in a pipeline transporting crude to neighbouring Cameroon for export via the port of Kribi.

The dispute was taken to arbitration at the International Chamber of Commerce in Paris, which ruled in favour of Savannah Energy on January 7.

In a statement on Friday, Savannah said Chad actions were in "direct breach" of commercial conventions to which Chad was a party.

It said that under Savannah Chad Inc. -- as the company has been renamed -- "the historic production decline (of oil) was immediately reversed".

Since December 9, daily production averaged 29,349 barrels per day, an increase of around nine percent compared to the equivalent period prior to Savannah taking control, it said.

"The company intends to pursue all of its legal rights," Savannah said.

Oil Minister Djerassem Le Bemadjiel did not immediately respond to AFP questions as to the reasons for the nationalisation.

In December, his ministry said the government was concerned about the "vital and sovereign assets" of the Doba oil fields and the pipeline in the event of any "irregular operation".

The vast semi-desert country, lying at the crossroads of eastern and western Africa, is one of the poorest countries in the world.

It became an oil producer and exporter in 2003 and has since become heavily dependent on the sector. Sales account for more than 11 percent of gross domestic product (GDP), according to the World Bank.