"Frontera" may return to the oil sector of Georgia29 Jan 2023 10:53
"Frontera" may return to the oil sector of Georgia
Business 28/01/2023
The State Oil and Gas Agency may announce an updated tender for the "Frontera" block.
As the chairman of the agency, Giorgi Tatishvili, told "Business Partner", "Frontera" returned 99% of the license block according to the international arbitration order. It has the remaining 1%, where the oil and gas corporation operates.
"The manager company of Frontera itself is in liquidation mode." Rather than the process of liquidation, if the economic situation does not deteriorate and the oil is not spilled, this oil will be brought to the state in its entirety. However, at the same time, we are talking to the American management of "Frontera", who wants to continue the work here, but with the reservation that the conditions set by the arbitration will be fulfilled, because they have money to pay. So there is a possibility that "Frontera" will return. If this does not happen, the state will continue to work there," says Giorgi Tatishvili.
According to him, formally, the owner of the license is still "Frontera". We are talking about "Frontera" founded in the Cayman Islands.
"When the liquidator entered this company, they had no motivation to work in Georgia. We will work until this situation with the American management of "Frontera" is settled and they make a decision whether to return or not," says Giorgi Tatishvili.
We remind you that "Frontera" violated the contract of June 25, 1997 on the share distribution of products and the processing plant, which became the legal basis for terminating the contract. According to the decision issued by the arbitration tribunal, "Frontera" was ordered to return the exploration area (about 99 percent of the contracted territory) to the state and reimburse the costs incurred by the Georgian side in connection with the arbitration dispute (the total amount of payment obligations is about 6 million USD).
According to the 1997 contract, "Frontera" was supposed to carry out exploration work within 10 years in order to discover new commercial reserves of hydrocarbons and further exploit them. After this deadline passed without results, the company asked for an extension of the search term 2 more times, which was granted by the Georgian side. Accordingly, the total period of search has increased by 20 years. As a result of a 20-year fruitless search, in 2017 "Frontera" again asked for an extension of the search term for an additional 5 years and refused to return the search area. This was the basis for the request of the Corporation and the Agency to initiate an arbitration dispute at the Permanent Court of Arbitration in The Hague.
Finally, the government of Georgia made a decision to terminate the contract with "Frontera", which was explained in order to preserve the investment environment and taking into account the strategic partnership with the USA.
Sign In
Follow the stocks
