The Valero St. Charles oil refinery is seen during a tour of the refinery in Norco, Louisiana
The Valero St. Charles oil refinery is seen in Norco, Louisiana. REUTERS

Chad's first oil refinery, a joint venture with China National Petroleum Company, has suspended production, arguing that the price agreed with Chadian authorities to supply them was driving it into heavy losses.

The launch of the 20,000 barrel-per-day refinery in June was hailed as making the central African crude oil exporter energy independent, with production due to be ramped up to 60,000 bpd.

But in a statement published in local media, the Societe de Raffinage de N'Djamena (SRN) said it had halted production from September 25 for a period of 40 days.

Citing the price of 200 CFA francs per litre of refined product agreed with the state of Chad, it said had already turned in a loss of some $4.7 million by end-August.

Refined petroleum products are sold at about 500 CFA francs on average at pumps in the region.

The stipulated price is judged unreasonable, the refinery is suffering a heavy loss and is unable to continue operating normally, the statement said.

The 588-million-euro refinery is 60-percent-owned by China National Petroleum Company, with state firm SHT holding the remaining stake. Construction began in 2008.

The plant takes crude by pipeline from Chad's Bongor oil basin, and also has an on-site power generator that was expected to deliver 20 Megawatts to N'Djamena.

Crude oil Energy China China