Sonatrach says UK partner failed to comply with contract obligations
Algerian national oil company (NOC) Sonatrach confirmed late on April 15 it had terminated London-based Sunny Hill Energy's upstream contract for the Isarene area containing the Ain Tsila gas and condensate field in eastern Algeria, citing its partner's failure to meet contractual obligations.
Sunny Hill revealed on April 15 that its contract had been terminated, meaning it will lose the 38.25% interest in the project held by its subsidiary Petroceltic. The company said it disputed the termination and would seek "well in excess" of $1bn in damages.
In its own statement, Sonatrach said it had exercised its rights to terminate the contract under Algeria's 86-14 hydrocarbons law of 1986, "having unsuccessfully asked Petroceltic to comply with its contractual obligations."
"By virtue of the termination notification, Petroceltic is granted a period of time to transfer the oil operations to Sonatrach," the NOC said, without disclosing how long that period was.
Sunny Hill entered Algeria in 2015 after acquiring Petroceltic. A development plan for Ain Tsila approved in 2012 envisaged the launch of a gas processing plant in 2017, expected to produce 10mn m3 of gas, 17,000 barrels of LPG and 11,500 b of condensate/day. Petrofac won a contract in 2015 to build the plant by the end of 2022.
"Sonatrach will continue the development efforts of this project with the objective of bringing this deposit into production in November 2022," the Algerian company said.