Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
If I were running an oil SM the 3 things I would look for first are.. size of the asset , commercially of the field and a stable country.
We know the assets huge , we know extraction costs are low and after what's happened with the electoral reforms this weekend the last box seems to be ticked. I still think a deal can be negotiated between the GG and FRR . Perhaps now a SM is ready to go and just waiting for the arbitration to be sorted.
The USA seem to be taking a huge interest in little Georgia. I dont see the same interest in any of the other 20 or so little countries in Europe .
Why is SB talking about the $3.5 billion Zaza said we are not sueing the GG ?
Arsenal ,
I believe the fact they asked for 99% and not 100% shows they know they need to compromise or why not ask for it all.
I'm almost positive that a SM is waiting to crack on in Block 12.
I think we have given the GG the upper hand slightly when Zaza said he was willing to negotiate. They have said they are going to wait for the arbitrational decision though apparently , personally I dont believe that's true. Zaza said a few months ago the last thing to sort was the length of the PSA so they must have been around the table to negotiate at some point.
I expect Zaza to become more vocal going forward now that the arbitration is concluded. If I were him I certainly would want to get the message out there to the Georgian people what sits under Block 12 .
It does seem the GG want a conclusion asap. They could have taken the arbitration route to get this concluded asap as the decision seems to be unappealable. A court case would have been. They wont want this dragging on years especially with renewable energy seemingly being the way forward over coming decades starting from the 30s.... we also got accused of slowing the arbitration process....
The issue I would like to know the answer to is will the arbitrators make a black and white decision. Obviously what I mean by that will they rule if we have broken the PSA then we lose the license .
If the answer is yes then we could be in trouble.
If the answer Is no and that they can make a ruling where they decide that we should hand over a percentage of the block and take into account mitigating circumstances we will be ok.
I believe the fact that they asked for 99% back instead of 100% back is significantl. That says to me that they are prepared to do a deal even though they have said in the legal papers they will wait for a decision.
I have been looking into an arbitration case in the energy sector. Veteran Petroleum Cyprus V The Russian federation.
This arbitration was started in 2005 ... concluded in 2014 so ran for 9 years.
I cant tell you anything about the award as I'm not qualified . I can tell you that the award itself was 615 pages long. I dont know where we thought we would get a decision from in April from but it could be longer than that.
The good thing for us is that our arbitration is concluded and that it seems the GG want to get cracking on with the development of Block 12 and not run down the PSA clock.
I read that the arbitration is not appealable on the PCA website .
Your welcome.
I agree this is not a black and white case , no where near it. I dont know if the arbitrators make a black and white decision or they make some kind of compromise decision for instance give the GG 20% more .... Arbitration is about making a compromise so hopefully it's the latter !
Ivy,
I will look into some of the cases over the weekend and see how far I get. There are 104 investor-state current arbitration going on that are listed. Ours is not listed as both parties have not agreed to that.
Some of the cases listed and that are on going are Chevron v Phillipines , Gazprom v Ukraine , Tennant Energy v Canada and Cairn Energy v India . Theres also a list of past cases.
It's really easy for anyone to find so I suggest for people to take a look . The website is very easy to manoeuvre.
I emailed them last week asking when they expected our case to be concluded by and got a reply basically saying they couldn't help . I didn't expect anything else as our case is not public .
One of my worries has been that the arbitration would not be "clean " however after visiting the website and reading up on the case administration and the arbitration rules it's clear that the PCA is very professional and legit. It's also clear they would have dealt with plenty of PSA disputes before .
Take a look people , it will put your mind at rest and is very interesting....
Yep it's common practice. If you go on the PCA website and click on past cases its littered with State v energy company disputes .
What have the GG got to lose $6 million . If we have got 30 tcf and they just get another 10% that's about $9 billion in there pockets in a TO situation. What if we have 202 TCF ...over $50 billion .
The PCA will know exactly what they are up too.
My figures are based on $3 billion per TCF take over price which is worth $9 Billion market value.
Dear Mole ,
When you do have time to post if possible could you give a view on the acquisition area/contract area talk there was a few months ago.
Thanks and regards ...
If BP bought us out or any SM they would be buying a resource that would last decades . What's going on right now is irrelevant
Shah Deniz is approximately 50 miles away and has about 250 TCF... it's very possible that we have the 202TCF. If we just have 30TCF that's still a huge number and worth probably around $90 billion being inland, with infrastructure and low extraction costs..
Goit
I believe that there is a SM waiting in the wings for the result of the arbitration. They wont want to wait 7 years for the PSA to run out . A take over and the length left on the PSA becomes irrelevant . It will however have to be a factor in the split of any offer a SM would make which again takes us back to arbitration or what I think will happen an agreement before the arbitrational result.
The aquision area mentioned around christmas is the Taribani part of Block 12 ... the area the SM wants .
Wishful thinking possibly however it's a theory .
JMO
I think I'm the only one that thinks the mention of an aquision area within the contract area is significant. Aquision means an asset bought or obtained so it sounds to me like a SM could be waiting in the wings for the arbitration to be sorted.
We know a new company has been set up between the GOGC and FRR... could be the company where a payment will be going on conclusion of the arbitration.
I think one of the real problems here is the PSA. If Zaza is to be believed then the last point to.sort was the PSA two months ago. Sadly from his interview it seems things have taken a backwards step since then.
The current PSA runs out in 2027 from then my understanding is that the GG can have the lot for themselves. There is something in the PSA that we can extend something to do with the refinery another 25 years but I'm pretty sure it's not the full PSA or that would be put there by now.
So that leaves us with 7 years remaining of PSA. it could take that to develop the field without the backing of a SM ... it would be in the best interests of the GG to run the PSA clock down as much as possible however they will also want some money in ASAP.
The American backing here is crucial and the fact that Zaza is Georgian without either of those things being in place we would be dead by now.
This is my brief understanding of what Zaza said about the arbitration.....
The GG want the PSA torn up and a payment of $70-80 million.
Zaza says we have not broken ANY of the PSA and we are not sueing the Government for $3.5 billion.
I must be missing something as Regdik mentions the $3.5 billion claim in his last post... anyway...
A couple of things to add..
My thoughts on the $3.5 billion claim are that I dont believe we are claiming. The value of the field is $10s of billions , why would we let the GG get away with a payment of say $1-2 billion and keep the asset. I was glad to hear that we are not claiming anything from them on reflection. It's a show of confidence to me that we are not sueing the GG if that is so.
I was pleased that Zaza mentioned the employees wages. If it was me this would be the first subject I would want to address. He sounded honest. Didn't deny it, said money was owed to some employees and in a nut shell said it had been blown out of proportion by the GG and that the GG had sort of colluded with the workforce to get them not to accept what Zaza was offering so the GG could use it to blacked Zazas name in the country...my take.
Great to hear that 5 american companies have completed an 18 month study of Block 12 and confirmed that we have a huge reserve , the opposite of what the GG are saying. This might be the crux of the arbitration. If we can prove that we have booked reserve it would be obvious to the arbitrators what the GG were up to.
The congressmen getting involved could be to do with getting the GG to do a deal before any decision on the arbitration . A long shot but possible.
I believe that the arbitration from what we know .. and theres alot we dont is about the GG getting more of the pie. What have they got to lose , not much ... legal fees of $6 million compared to maybe getting billions more of the pie over 25-50 years.... no brainer for them . If they lose they still have what they had before bringing the arbitration.
GL to all us LTH... interesting we found all this out on 14th February. I hope we can all fall back in love with Zaza and that the shorters get massacred...
There will be alot of Georgian reporters on the case now after the TV interview. I expect more to come out over the coming days.
Two things of note there for me...
Oopsi said a while back that we could have a course of appeal.
Any award would have to be paid so say we were awarded $1 billion the GG would have to pay us. Where would the money come from ?
I think arbitration has always been about the GG getting more of the pie not the lot !