Oil and Gas

UPDATE 1-China's CNPC agrees to pay $400 mln to settle Chad dispute -Chad minister

(Adds details of agreement)

N’DJAMENA, Oct 27 (Reuters) - China National Petroleum Corporation (CNPC) has agreed to pay $400 million in compensation to settle an environmental dispute with Chad, the central Africa country’s oil minister said on Monday, a fraction of the $1.2 billion sought by the government.

“A definitive and friendly resolution has been found with CNPC,” Djerassem Le Bemadjiel told a news conference. “If you don’t respect the environment here, there’s a price to pay.”

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

The Oct. 24 deal also foresees the Chadian state taking a 10 percent stake in CNPC fields that are already producing oil and a contract for production sharing, in addition to existing royalty payments, the minister said.

The agreement will allow CNPC to export oil for the first time along the Chad-Cameroon pipeline, he added.

CNPC was previously using all its production for the local 20,000 barrel per day refinery.

Chad started oil production in 2003 and its output peaked at 176,000 barrels per day in 2005 before declining, primarily due to ageing wells in the Doba oilfield.

Oil major ExxonMobil and Swiss trading firm Glencore already export crude oil from the landlocked country. (Reporting by Emma Farge and Madjiasra Nako; Editing by Daniel Flynn and David Evans)