VZCZCXRO1020
OO RUEHBC RUEHBZ RUEHDE RUEHDH RUEHDU RUEHGI RUEHJO RUEHKUK RUEHMA
RUEHMR RUEHPA RUEHRN RUEHROV RUEHTRO
DE RUEHNJ #0194/01 1421202
ZNR UUUUU ZZH
O 221202Z MAY 09
FM AMEMBASSY NDJAMENA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6947
INFO RUCNFUR/DARFUR COLLECTIVE PRIORITY
RUEHEE/ARAB LEAGUE COLLECTIVE PRIORITY
RUEHZO/AFRICAN UNION COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RHMFISS/HQ USAFRICOM STUTTGART GE PRIORITY

UNCLAS SECTION 01 OF 02 NDJAMENA 000194 
 
SIPDIS 
SENSITIVE 
 
STATE FOR AF/C, S/USSES - SE GRATION 
NSC FOR GAVIN 
LONDON FOR POL - LORD 
PARIS FOR POL - D'ELIA AND KANEDA 
ADDIS ABABA ALSO FOR AU 
 
E.O. 12958: N/A 
TAGS: PGOV ECON PREL EPET EFIN AU SU LY CD
SUBJECT: ESSO LEANS TOWARD ASSISTING GOC ON 2009 BUDGET 
PROBLEMS BY ADVANCING SOME TAX PAYMENTS, SEEKS LEGAL 
CONFIRMATION OF 2008 ACCORDS 
 
REF: NDJAMENA 99 
 
------- 
SUMMARY 
------- 
 
¶1.  (SBU) ESSO-Chad Chief Stephane de Mahieu told Ambassador 
Nigro May 20 that the oil company was leaning toward agreeing 
to the GOC's request for flexibility with royalty and tax 
payments in 2009 by advancing some expected second half-2009 
payments to the second quarter, to help the GOC stay on or 
near budget for this year.  De Mahieu said that ESSO sought 
GOC finalization of amendments to the GOC-ESSO MOU agreed 
last year.  With ESSO's assistance, plus the slight recovery 
in the price of oil, some spending restraint, and a 
substantial line of short-term credit at the regional bank, 
the GOC may just manage to avoid running out of money in the 
first half of 2009 and perhaps through the year, which would 
make the GOC's effort to successfully complete an informal 
program with the IMF more likely.  END SUMMARY. 
 
------------------------------------- 
ESSO LIKELY TO HELP GOC'S BUDGET WOES 
------------------------------------- 
 
¶2.  (SBU) ESSO-Chad's General Manager Stephane de Mahieu 
updated Ambassador May 20 on ESSO's discussion with the GOC 
regarding the schedule of royalty and tax payments.  Given 
the greatly weakened price of oil, the GOC was forecasting 
budget difficulties during 2009 and had asked ESSO for 
flexibility with payment schedules.  Due to a change in the 
terms of royalty and tax payments, coupled with the fall in 
oil prices, ESSO had told us in March 2009 (reftel) that a) 
the GOC owed ESSO a refund for overpayment of royalties and 
b) ESSO did not expect to make a profit until the second half 
of 2009, which implied no royalty or tax payment to the GOC 
in the first half of the year. 
 
¶3.  (SBU) De Mahieu said May 20 that ESSO had not yet come to 
a final decision, but was considering spreading projected 
2009 royalty payments over three quarters, beginning with 
second quarter 2009.  De Mahieu said that this decision would 
be predicated on oil staying above USD 50 or 55 per barrel. 
Even with an accelerated payment schedule, de Mahieu 
estimated a second quarter payment would only be USD 20-40 
million. 
 
---------------------------------- 
BUT WANTS GOC ACTION ON AMENDMENTS 
---------------------------------- 
 
¶4.  (SBU) The GM also said that the GOC would have to show 
some good faith as well with respect to amendments to the 
GOC-ESSO MOU.  The changes to the terms of payment that were 
renegotiated in September 2008 required formal amendments to 
the MOU, he recalled.  De Mahieu said that the amendments had 
been reviewed by the Council of Ministers and blessed by 
Presidential decree but were still awaiting final passage by 
the National Assembly.  He estimated that the Ministry of 
Petroleum would only need some three weeks to prepare all the 
documents necessary for parliament, so action could be taken 
almost immediately after Parliament resumed session.  (Note: 
The President of the National Assembly adjourned parliament 
the week of May 11 so deputies could participate in the 
census in their home districts.  It is not clear whether the 
body will resume session as scheduled in early October or 
reconvene for an extraordinary session in the interim.  End 
Note.) 
 
¶5.  (SBU) De Mahieu postulated, however, that the Ministry's 
reluctance to conclude the amendments could be related to 
Minister of Petroleum Mahamat Nasser Hassane's desire to 
reach an agreement with ESSO on a "topping plant," integrate 
it into the current agreement and present everything to the 
National Assembly at once.  (Note:  A topping plant would 
refine some of Chad's crude for use domestically.  End Note.) 
 The GM speculated that there were political issues related 
to a final decision on the topping plant and said he did not 
foresee an agreement on it soon.  He added that he had 
conveyed to Nasser ten days earlier his concern over lack of 
 
NDJAMENA 00000194  002 OF 002 
 
 
progress on the outstanding amendments, to which the 
Petroleum Minister had reacted with a promise to take action. 
 
------- 
COMMENT 
------- 
 
¶6.  (SBU) With ESSO's assistance, a slight recovery in the 
price of oil, and a line of credit at the regional bank, the 
GOC may just manage to avoid running out of money in the 
first half of 2009.  The budget will still be tight and final 
discussions with the IMF to revise the 2009 budget are on a 
positive track but still ongoing.  We are cautiously 
optimistic the GOC's budget woes will end well.  END COMMENT. 
 
¶7.  (U) Minimize considered. 
NIGRO