• Natural Gas News

    Oz Oilex Files Counterclaim Against East Timor


The dispute relates to JPDC production sharing contract in Timor Sea.

by: Shardul Sharma

Posted in:

Natural Gas & LNG News, Asia/Oceania, Security of Supply, Corporate, Litigation, Political, Contracts and tenders, News By Country, Australia

Oz Oilex Files Counterclaim Against East Timor

Australia-listed Oilex and its partners have lodged a counterclaim against the East Timor’s petroleum regulator Autoridade Nacional Do Petroleo E Minerais (ANPM) for US$23.3mn (plus interest) as damages arising from the wrongful termination of the production-sharing contract (PSC), Oilex said August 19.

In October 2018, ANPM began arbitration proceedings against Oilex and its joint venture partners, in regard to the PSC in Timor Sea.

Oilex said it had opened proceedings in the International Chamber of Commerce (ICC) in Singapore. Oilex holds a 10% participating interest in the joint venture. The arbitration hearing is due to start in February 2020, Oilex said.

In November 2006, Oilex and its joint venture partners entered into the PSC. The PSC effective date was January 17, 2007 and Oilex was appointed the operator. In July 2013, Oilex submitted to the ANPM a request to terminate the PSC by mutual agreement in accordance with the PSC terms and without penalty or claim. According to Oilex, the request was issued as a result of ongoing uncertainty as to security of PSC tenure which arose as a result of a maritime boundary dispute between the governments of Timor Leste and Australia.

In May 2015, the ANPM issued a notice of intention to terminate the PSC and subsequently, on in July 2015, issued a notice of termination and demand for payment, Oilex said.

The demand for payment (100%) of the penalty claim of US$17mn (plus interest) reflected the ANPM’s estimate of the cost of exploration activities not undertaken in 2013, as well as certain local content obligations set out in the PSC, according to Oilex. More recently, ANPM has sought to amend its claim to US$22.26mn.

In October 2018, Oilex announced it had received correspondence from ANPM, the body responsible for managing and regulating petroleum and mining activities in the Timor-Leste area, advising that it had submitted a request for arbitration (RFA) to the ICC. The RFA relates to matters associated with the termination of the PSC by the ANPM.

Commenting on the arbitration, managing director Joe Salomon said that “it was disappointing that the ANPM elected to pursue arbitration. The US$23.3mn counter-claim further supports our view that the joint venture has previously and will continue to act in good faith, with previous offers to settle the matter being generous.”

Oilex said that the joint venture considers it has made significant over expenditure in executing the PSC work programme and further, the ANPM failed to properly assess and award credit for such additional expenditure when terminating the PSC.