UK firm claims seizure of gas asset in Algeria
London-based gas explorer Sunny Hill Energy has accused Algeria's state-owned Sonatrach of seizing its share of the Ain Tsila gas and condensate field in eastern Algeria, warning it will seek "well in excess" of $1bn in damages.
Sunny Hill has a 38.25% interest in the Ain Tsila field through its Petroceltic subsidiary. But Sonatrach has terminated the contractual interest without offering compensation, Sunny Hill said on April 15. The UK firm said it had invested hundreds of millions of dollars in the project.
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"Sunny Hill Energy disputes the validity of the contract termination and, having taken legal advice, intends to pursue all legal recourse to compensate it for the loss of its interest which Sunny Hill Energy values well in excess of $1bn," the company said.
"Sonatrach has acted in an aggressive and irrational manner. Their expropriation of our interest without compensation is the type of action expected in Hugo Chavez's Venezuela and not from a country like Algeria that proclaims to respect the rule of law," Sunny Hill chairman and owner Angelo Moskov said. "This unwarranted action will be highly damaging to the attempts by Algeria to attract foreign investment into the country."
Algeria passed a new hydrocarbon law in late 2019, offering more attractive terms to investors in the hope of galvanising oil and gas development and stemming production decline. It has since signed a number of preliminary deals on joint upstream activities with international oil companies, but has struggled to finalise any agreements.
"We have strong legal advice that this action by Sonatrach is without legal merit. We have fully met our contractual obligations including providing our full share of resources required for the operation of the joint venture with Sonatrach," Moskov continued. "We will robustly pursue our claims taking all actions to protect our interests. This will include making a claim for compensation from Sonatrach and/or the state of Algeria well in excess of $1bn."
Sunny Hill entered Algeria in 2015 after acquiring Irish explorer Petroceltic International. Petrofac won a $1bn deal to build a gas processing plant at Ain Tsila in 2019 and the facility is due online by the end of 2022.