Tuesday, 19 August 2014

Developments in US$1.2 billion Chad-CNPC arbitration court hearing

The China National Petroleum Corporation (CNPC) has denied breaking environmental rules in Chad’s oil sector and demanded the Chadian government drops its US$1.2 billion claim at an arbitration court in Paris.

The dispute began in July 2013 after Chad said it discovered large quantities of crude had been dumped into pits dug in the Koudalwa region, where CNPC has held licenses to several oil blocks since 2009.

The CNPC was forced to suspend operations in Chad this May after refusing to pay the US$1.2 billion fine for "unacceptable practices" which led to "noxious spills" around drilling sites.

Secretary-general of the Chadian government, Abdoulaye Sabre Fadoul, at a news conference at the beginning of August, stated that "Amicable negotiations are no longer possible. All efforts have been in vain… That is why we have decided to take a complaint to the arbitration tribunal in Paris, as agreed under the terms of our contract with CNPC." 

As well as taking the case to the International Arbitration Chamber of Paris, the minister said the government had lodged a complaint against CNPC at a court in N'Djamena for ‘environmental destruction and endangering lives’ and had cancelled five exploration licences held by CNPC.

A spokesman for the Chinese oil company could not be reached for a response to the minister’s statement. Speaking this week at the arbitration hearing, however, a CNPC spokesperson said that the leaked oil consisted of a "small amount" and its own analysis had not shown penetration into the ground water.

The firm added that it was hoping for the "cancellation of this decision and an ongoing effort to resolve this negotiation amicably," adding that the government has declined to provide the firm with a breakdown of damage to justify the large claim.

Chad, which began exploiting its oil deposits in 2003, has a history of difficult relations with Chinese companies operating on its soil.  In March, Chadians working for Great Wall Drilling Corporation and China National Logging Corporation went on strike to denounce their working conditions and demand salary increases.

For more news and expert analysis about the Sahara region, please see Sahara Focus.

© 2014 Menas Associates

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