Page 14 - FSUOGM Week 18

FSUOGM PROJECTS & COMPANIES FSUOGM
Georgia terminates PSA with US Frontera Resources
GEORGIA
THE state-owned Georgian Oil and Gas Cor- poration (GOGC) has announced the termi- nation by Georgia’s State Oil and Gas Agency of its 1997 oil production sharing agreement with Texas-based oil company Frontera. e move follows the upholding by an international arbi- tration tribunal of the vast majority of claims led by the Georgian state against the US rm.
Frontera in a press release quoted by Business Media has said that Georgia is making mislead- ing statements in relation to the arbitration’s outcome.
“Frontera is pleased with the decision of the Arbitration Court,” Frontera said, without pro- viding substantial information about the actual decision of the tribunal.
Georgia had accused Frontera of violating the terms of the contract signed in 1997. Speci cally, it claimed that Frontera refused to return to the state land it was no longer using for extraction. No request for the exploitation of an allegedly huge amount of discovered gas was led, either, it said.
GOGC indicated that the State Oil and Gas Agency had sent it a notice as regards the termi- nation of the contract with Frontera, and that the contract would be automatically considered as terminated on July 27.
“On April 17, 2020, the final arbitration decision was issued between the parties, on the one hand, Georgian Oil and Gas Corporation and State Agency of Oil and Gas (Georgia), on the other hand, Frontera Resources Georgia Corporation and Frontera US (Frontera) upon non-fulfilment of contractual obligations of the production sharing agreement and re nery study dated 25 June 1997,” the Georgian com- pany said.
“The Arbitration Tribunal supported the
interpretation of the norms of the contract by Georgia and satis ed a vast majority of its claims. Along with other issues, e Arbitration Tribunal ruled that Frontera committed a mate- rial breach of the contract by refusing to return the exploration area (99% of the entire licensed area) to the State, which gives the State right to terminate the contract,” the press release issued by GOGC said.
The company also said that the tribunal upheld an appeal against the claims of Frontera and terminated the arbitration proceedings on the issues raised.
The decision of tribunal is final, GOGC stated.
e decision to initiate the dispute was made after numerous attempts by the state agency and corporation to resolve it failed. Frontera repeatedly rejected the proposal to end the dis- pute through mediation, the press release from GOGC added.
Frontera’s activities in Georgia have for years been dogged by controversy, including accusa- tions that it was not paying workers, OC media said in a comment piece on the case.
In 2015, Frontera announced that it had dis- covered 3.8 trillion cubic metres of gas in Kak- heti Region, eastern Georgia.
A year later, then energy minister Kakha Kal- adze said that the company had not appealed to the ministry for permission to extract the reserves despite the government renewing con- tracts with it annually.
In a statement in June 2016, GOGC said that “to con rm the existence of resources indicated in the report [of Frontera Resources], it is essen- tial to carry out concrete aim-oriented activities; however, the company still hasn’t presented a plan that would serve this purpose”.™
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w w w . N E W S B A S E . c o m Week 18 06•May•2020