Ascent to Sue Slovenia for 'Wrong' Decision
UK explorer Ascent Resources has now had official confirmation from the Slovene environment minister of the decision to block its application to fracture two wells, it said June 14. Ascent read of the negative decision on local media, rather than from a direct ministerial notification, which rubbed more salt into the wound.
It said it would submit a "robust response to this manifestly wrong decision contrary to EU law" in advance of the deadline July 15 and warned shareholders that the planned litigation would consume most of its time and resources.
The decision of energy regulator and the ministry ignores the opinion of the six independent expert bodies whose advice the regulator sought, Ascent said. The decision also mistakenly concluded that the project fell within a conservation area and misapplied EU case law in relation to mitigation measures, it added.
The application was submitted in May 2017 and the regulator made its ruling in March 2019, but under Slovene law, decisions on preliminary screening applications must be taken within two months, or within 90 days under EU law, so Slovenia is also in breach of national and EU law.
Ascent said it will seek damages for loss of future income from the project which would have been expected to have been a multiple of the historic investment of some €50mn ($56mn).
Ascent has also been working with legal experts for some months developing an investment treaty arbitration claim under the Energy Charter Treaty. With very little chance of achieving the goals of its investment, Ascent will also move ahead with this claim, it said.
The level of the claim for damages will mean any legal action will be costly but Ascent will seek to conclude an arrangement to finance legal claims in the least dilutive manner possible, it said. It does have some revenue in Slovenia from the sale of gas it is producing at Petisovci and selling to Croatian Ina.
But the focus in Slovenia now inevitably shifts away from Petisovci and towards obtaining legal redress for the damages inflicted on shareholders by the actions of the government. "As a result, we will consider a wide range of measures to reduce our operating costs to the minimum necessary," it said. It will be reducing costs including directors' remuneration from the end of June 2019.
The strategy of the company remains to maximise the value of its Slovenian asset while seeking to grow in the region. "We will seek to realise value for our Slovenian asset, by aggressively pursuing claims for damages in all available jurisdictions to the fullest extent of the law. At the same time the company continues to pursue other opportunities in the region in jurisdictions with established oil and gas industries and a developed regulatory system," it said.
CEO Colin Hutchinson said: "The decision of the environment ministry is deeply damaging to the project and to the interests of Slovenia, we will seek to obtain full redress for shareholders through local and international courts."