Chad threatens to cut off oil pipeline

N'DJAMENA, Chad -- Thousands rallied Saturday in Chad's capital to support the president following a defeated rebel attack, while the oil minister threatened to shut down the country's oil pipeline unless the government is compensated for frozen oil revenue.

President Idriss Deby's government appears desperate to attract international attention to solve Chad's political, economic and security problems.

Oil Minister Mahmat Hassan Nasser said in an interview Saturday that the pipeline would be shut down unless the international community ensured Chad received its oil royalties by midday Tuesday.

Chad's oil exports -- 160,000 barrels per day -- are small by international standards and have a high sulfur content, reducing their value. But Deby appeared to be gambling that any threat to the world oil supply, no matter how small, will bring attention to his plight and free up needed funds to finance his government.

The warning came a day after Deby announced that he was severing relations with neighboring Sudan and threatened to expel 200,000 refugees from the Darfur region if the international community did not do more to stop what he claimed were Sudanese backed-rebels from destabilizing his government before the May 3 presidential election.

In January, the World Bank froze an escrow account with $125 million in oil royalties in London, Nasser said. It also cut $124 million in financial assistance after Chad changed an oil revenue law passed in 1999 as a condition for the World Bank's support for the pipeline.

Nasser said the funds must either be released or the operators of the pipeline must compensate the Chadian government.

The law required two-thirds of oil revenues to go toward improving living standards in one of the world's poorest countries. It also required 10 percent of proceeds to go into a savings fund to be used when Chad's oil reserves are exhausted.

But the National Assembly amended the law in December. It doubled the money going to the government's general budget, freed money in the savings fund and added security -- buying arms and equipment for the military and other security forces -- to the programs that received over two-thirds of the royalties.

Nasser said Chadian officials met twice with World Bank representatives seeking to unfreeze the funds, but without success. He said that without payment, the government would have to shut down the pipeline, which flows through Cameroon to the Atlantic Ocean.

"The government has the right to act as it sees fit if obligations are not met," Nasser said. He said such a move would not harm his government, but would hurt other businesses and Cameroon, which have been collecting revenues from the oil.

World Bank officials were not available for comment.

An Exxon Mobil-led consortium exported 133 million barrels of oil from Chad between October 2003 and December 2005, according to World Bank statistics. Chad, which receives a 12.5 percent royalty on each barrel exported, earned $307 million, the bank said.

The consortium invested $4.2 billion in the pipeline. Nasser said the pipeline would continue to operate if the consortium pays the royalties frozen in London and pays future revenues directly to Chad's treasury.

Thursday's rebel attack on the capital has shaken Deby's government and, with the rebel United Front for Change regrouping in the countryside, the threat of a violent overthrow of the government has not diminished.

Rebel commander Col. Regis Bechir told Radio France International that Deby's regime was a menace.

"Dialogue is the only way to save the people of Chad," he said. "A national reconciliation, with a democratic basis, would be best. And we are determined to continue the armed struggle against the phony elections."

Deby held a rally in central N'djamena, the capital, Saturday where thousands of people packed into the Place d'Independence, waving Chadian flags and shouting slogans. The president arrived in a civilian Humvee surrounded by hundreds of well-equipped soldiers and thanked them for "crushing the rebels."

"We will do anything to preserve democracy in Chad, we will do anything to preserve security in Chad," Deby said.

The crisis in the western Sudanese region of Darfur, which the United Nations has called the world's gravest humanitarian crisis, and internal dissension over how to spend oil revenues have weakened the president, who has led Chad since seizing power in a coup in 1990. There has been enormous dissent over his decision to run for a third term after two irregular elections and over how oil royalties have disappeared.

Deby repeatedly has accused Sudan of hiring mercenaries to overthrow his government. Sudan has denied this and has long accused Chad of supporting fighters in its volatile Darfur region, where Arab militias and African rebels have fought for nearly three years. Some 180,000 people have died in Darfur.

The Sudanese government has denied any involvement with the Chadian rebels and Deby has taken a lead role in African Union efforts to negotiate a peace deal for Darfur.

Chad, an arid, landlocked country about three times the size of California, has been wracked by violence for most of its history, including more than 30 years of civil war since gaining independence from France in 1960 and various small-scale insurgencies since 1998.

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Associated Press writer Abakar Saleh contributed to this report.