Page 45 - GEORptMay20

9.0​ Industry & Sectors 9.1 ​Sector news
9.1.1 ​Oil & gas sector news
The state-owned Georgian Oil and Gas Corporation (GOGC) has announced​ ​the termination by Georgia's State Oil and Gas Agency of its 1997 oil production sharing agreement with Texas-based oil company Frontera.​ The move follows the upholding by an international arbitration tribunal of the vast majority of claims filed by the Georgian state against the US firm.
Frontera in​ ​a press release​ quoted by Business Media has said that Georgia is making misleading statements in relation to the arbitration’s outcome. “Frontera is pleased with the decision of the Arbitration Court,” Frontera said, without providing substantial information about the actual decision of the tribunal.
Georgia had accused Frontera of violating the terms of the contract signed in 1997. Specifically, 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 filed, either, it said.
GOGC indicated that the State Oil and Gas Agency had sent it a notice as regards the termination 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 refinery study dated 25 June 1997,” the Georgian company said.
“The Arbitration Tribunal supported the interpretation of the norms of the contract by Georgia and satisfied a vast majority of its claims. Along with other issues, The Arbitration Tribunal ruled that Frontera committed a material 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.
The 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 dispute through mediation, the press release from GOGC added.
Frontera’s activities in Georgia have for years been dogged by controversy, including accusations that it was not paying workers, OC media said in​ a​ comment piece​ ​on the case.
45​ GEORGIA Country Report ​May 2020 ​​www.intellinews.com