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Pt.11
Are you a businessman, Mr. Zaza?

Of course. Therefore, it is very important for businesses to have a good image of the country, a good image of the project, so that shareholders, banks, funds, were interested in working in that country and investing in the country. If the country has a very bad name, a very bad authority, a very bad image abroad, it will lead to the fact that these investment banks, funds, shareholders, various companies will no longer be interested in coming to Georgia. Therefore, we have always been very careful about this issue and we have tried to resolve these issues through negotiations and agreement.

I understand ... now it is always difficult to talk about the past with some speculation - "it would have been better this way or not ". Although it is possible on a separate issue, when you mentioned the issue of license, then would have been better and less damaging, including for business and country, than the situatino and evaluatinos, which are now available and come from strategic partner of Georgia, it is mentioned in the context besides your country, also the case of „Anaklia port”, which is comperatively clear when we talk about interests of West and Russia, and taking the factors into account, When the Anaklia project is delayed today, despite official statements from the government that it supports and is still ready to implement. This is a separate topic and will take us far, time will pass very soon, unfortunately. Another listener is waiting for us. Good morning. You are on the air!

Hello, Ms. Nino. That's the kind of thing I care about. Wherever there is oil, there is a tense relationship - Venezuela, Libya, Syria, Iraq, and everywhere their governmen has been taken down when they confront foreign companies. If Georgia starts to actually process oil, will this product remain for it? Secondly, Ms. Nino, when you want to know the truth, you have to listen to both sides. It will be good if you bring the complainant in this case and we will understand the opinion. Otherwise, everybody considers themselves right.

Thank you so much for the advice. The traditional format of this show is this and I don’t see a problem with talking to an individual, a separate party. However, it is not a problem, of course, to listen to either side, and as for the positions of the corporation, I try to present it more or less, because the positions of the corporation are also open and known and, of course, we will give them airtime if they have a will like Mr. Like Zaza. That would be really interesting. Mr. Zaza, if you could answer that to the listener - in case of extraction, how can the products be processed on the spot and left?

Pt.10

Mr. Zaza. Zaza Mamulaishvili is our guest today, he represents the company "Frontera". „Radio Tavisufleba”`s “Morning Talks” are on the air, which phone number is 2 988 327. I will continue if you please, again with the activities of the company and I want to say more about the perspective. We know that the agency has announced the termination of the contract with the company "Frontera". What is the status of this issue? How is this issue resolved - has a contract been signed between the company and the state, and how do you see the future? I know that you stay in Georgia and continue to work, but what is the perspective?

The prospect is as follows, e.g. Neither by the decision of the arbitral tribunal nor by the contract, the Oil and Gas Agency and the authorities have any right to terminate the contract unilaterally. To be honest, it is completely incomprehensible what such a public statement of theirs serves when they have neither this right under the contract nor by the decision of the arbitral tribunal. We certainly continue to work. It is incomprehensible to us that even if they are going to expropriate us or are going not to let us go to our institions by force, we will not be able to tell you about it until today. I think it would be very foolish behavior to hurt the image of the country in the future, so I hope they don't do that, but I want to emphasize once again that neither they have the legal nor the contractual right to terminate the agreement unilaterally.

Mr. Zaza, is was also reported that “Frontera” itself is demanding payment from the state. Can you explain what this is all about? There was talk of 3 billion, if I am not mistaken ...

Yes, that was $ 3.5 billion. When the authorities filed a lawsuit against us in the Stockholm Arbitration Court, we filed a counterclaim where ew listed the damages we were seeking to compensate because they were systematically obstructed, systematically violated and did not provide for the terms of the contract, because they were unable to allow us to drill and increase oil and gas production. And because they didn't give us all that, they did a lot of damage to the company and the country.

Why didn't you ask for it in time?

We did not ask for it because we were trying to get it through negotiations and consensus

And, if it hasn't worked for years, why not intervene in court or arbitration?

Because court and arbitration are very bad for the country. It's very important...

Pt.9
So, there are 2 categories of countries. Countries that use this great good for the benefit of their country, and this is the case, for example, with Norway, USA. There are countries that, on the contrary, use this resource to enrich a few people and the rest of the country lives in poverty. Probably the best example of this is Venezuela, which is the world's richest (richer than Russia and Saudi Arabia) in oil and gas resources but the population is searching for food in the trash and sugar is not for sale in the country and that`s because they have corrupted government in which only a few people want to get rich. So that, thank you very much for this question, it depends on the country, the state, the approach and the philosophy that exists in the country. By the way, the Americans have such a very important law, the "Act on the Prohibition of Corruption Abroad", i.e. American companies can’t even pay a bribe and don’t have the right here for their employee to pay a bribe because the management will be arrested in America. Therefore, the United States is in favor of a very open, clean and transparent business, and this good that we will gain, of course, in the case of its rational operation and distribution, this great good will be given to the population of Georgia. For example, I would like to tell you one thing that is very important now - as a result of our 560 million investment, when independent American certification companies confirmed this stock of gas and oil, it means that people who own land, say in Kakheti, Sagarejo or Dedoplistskaro district, and that if the state would give them the right to mining, i.e. If a person has 2 hectares of land and there is this wealth in this land, the price of this land will already increase and these people will be enriched by it. That's how Texas got rich, that's how Louisiana got rich in the United States, that's how the whole of America got rich, that they had their land and the resources in the the land belonged to them. For instance, even now, if the government makes the changes and grants the rights to the resources to the landowners, they will be richer even now, because we have already proved that there is oil and gas in the lands and the rational use of it will be spread to the whole country and population. So, if we act clever, as the country, this wellness will touch every citizen.

Pt.7
It is clear. I would like to talk briefly about the decision of the arbitral tribunal, the publicity of which you do not support, and the publicity of which is demanded by the state of Georgia, the other plaintiff. What is the reason?

We support the disclosure. However, we have repeatedly offered the Georgian side, the State Oil and Gas Corporation and the Oil and Gas Agency to make a joint statement on the arbitral decision, as the decision is very clear and leaves no room for speculation. Therefore, I wanted to jointly disclose the arbitral decision, but I have been refused several times. As for the publication of a 152-page document, it is difficult to do so, as this document contains a large part of commercial confidential information, a lot of technical confidential information and personal information of various individuals, so we need to legally clear all this in order to be able to make the remaining document public. It will take time, so we have repeatedly appealed to the Oil and Gas Corporation and the Ministry of Economy to make a joint statement to let the public know that there is no room for speculation and to jointly announce the outcome of the arbitration, which we have been unfortunately refused several times.

As for the part of the decision announced by the corporation, what would you say about it? You say that you didn't even argue about some part, and that wasn't a matter of controversy at all. Specifically, it concerned the return of land to the state.

Ms. Nino, I think this statement, which was made, is quite irresponsible, the Oil and Gas Corporation and then other officials said that "we won" - this was the statement, "Unfortunately we all lost, Oil and Gas Corporation lost, The government lost, the company lost, Georgia lost." And, that's because there's no such thing as winning. Georgia has appeared completely different in the world as a country that is quite aggressive towards the 23-year-old, the largest American investor in Georgia. After investing so much, and, by the way, we’re not the only ones with such problems, so there’s no winning side here. Everybody was hurt, we all lost. But in essence, what is in this conclusion is that the government demanded that the company, as if we had violated the terms of the contract, must pay more than 320 million in fines, and this, of course, was unfounded and the arbitral tribunal did not grant this request. The government also demanded that we cancel the contract because it was as if we were violating the terms of the contract. This was also not upheld by the arbitral tribunal. These were the basic requirements around which this dispute arose. And what was approved for them was that we had to pay the Oil and Gas Corporation in advance for approx. $ 200,000, which we have been doing for 23 years, and we do not deny that we would pay this advance.

Pt.6
How was the refusal of the license explained? On the first, on the second, etc?

It was a long bureaucratic refusal, completely unfounded and unsubstantiated. But this bureaucratic machine refused us. No matter with what kind of technical or commercial justification we addressed them, it was "no." And we could not overcome this "no" until communication from Washington with the Prime Minister took place. Only then did the case start from this zero point. And, finally, Ms. Nino, it turned out that for the first time in the history of Georgia, the natural gas extracted in Georgia was supplied to many customers in Georgia through distribution networks across different parts of the country. Such a thing has never happened before, and this has once again confirmed the possibility that Georgia has enormous potential for natural gas extraction, exploitation, distribution and use in various fields.

Did it affect the tariff at that time? Just to make it clear to the listener why they should be interested.

interested is that, first of all, Georgia has its own resources for natural gas, which will definitely achieve energy independence, because the potential is huge. It has a completely different position economically and politically in the region, you know, now Azerbaijan has a huge political influence on Georgia because it supplies natural gas to Georgia. Russia also has a huge political influence, supplying 10-20% of Georgia`s natural gas consumption annually. And, you can imagine, if there is no need for that and Georgia has its own resources, one is that it will be energy independent, the other is that it will be richer and stronger economically. So, in the long run, of course, it is in the interest of each of us that Georgia has its resources. In addition, as mentioned above, due to the fact that more than half of this extracted natural gas is given completely free of charge to the government, the state can decide to provide customers with high tariffs, low tariffs, differentiate social layers with differentiated tariffs, so that it will be more flexible in its financial, economic and social direction.

Pt.5

Historically, the best mining place in Georgia per 1 well was the Samgori mine, which was discovered in 1974 and the miners could extract about. 1000-1200 tons per day. Since then, no mineshaft was able to extract such amount of resouce. In our case, the maximum rate of extraction that we had was 950 barrels, approx 150 tons, and also 30.000 cubic meters was tankle gas, well that was an excellent result. Historically the biggest oil extraction in Georgia, in 24hrs was 4-4.5 million tons of oil, as for natural gas extraction there had been none before. Now as for the value of the mineshafts, the mineshaft`s cost nowadays, if you want to drill in 3500-4000 meters, is about 5-6 million dollars. The cost is influenced by advanced technology, which means that 1 mineshaft will be drilled in about 2-3 months. For instance, 25, 30, 35 years ago when state company was drilling the mineshaft, it was way too expensive, because the drilling duration lasted for 1.5-2 years. Therefore, the technologies adnvanced and now you can drill 4000 meter deep mineshaft for about 5-6 million and with those debits where 1000-1500 barrels are very useful for the countries.

Mr. Zaza, let's go back to what we were discussing and thus my question will be the folling. You mentioned that the relationshio was complicated with the corporation since 2013. What was the content of this complication? Because if we follow all the statements and answers, we will not have time and just to summarize what was the content of this complication according to your information? What can you share with us?

The main reason for this complication was that we were able to drill very successfully and then test the gas mineshafts and as soon as we informed the Oil and Gas Corporation, the Ministry of Energy, we were expecting them to be very happy with this news, although this did not happen. And it was then that the real complications began, that after this successful test, when we decided to connect one of the gas fields to the main pipeline, the state did not give it to us, even though it belonged to us by law and contract, they did not give us the permission of construction of the pipeline. After long communication, it still was not given to us until the members of Congress intervened and communicated with the State, the Ministry, and the Prime Minister, and only then they gave us the right to build the pipeline.

Which year was that, Mr. Zaza?

It was 2014. Before that we were trying to rach an agreement through the negotiation but all was in vain. And, in 2014, we completed the construction of a 16-kilometer gas pipeline, and after that, we were no longer allowed to carry our own gas to our own gas pipeline. This license was not given to us. They did not give us the license until the communication from Washington, and until congress members contacted the Prime Minister.

Pt.4

In 1997, our contract began with the state signing an agreement under which we would take the entire investment risk on ourselves to carry out the work and find and then extract the oil and gas from these fields. No capital investment is a state obligation, it does not invest any money and most of the oil (more than half) belongs to the Georgian government completely free of charge. If all this fails, the whole risk of investing is ours and only the company will fail in this case. Fortunately, our relationship developed very successfully. During this time and as a result of a $ 560 million investment, we have discovered 350 billion cubic meters of extractable gas. This is south-eastern Georgia, mainly in the Kakheti region. And also 1.5 billion barrels of oil reserves, which have been confirmed not only by our employees and scientists, but also by world famous stock certification companies, which means that the vast majority of these reserves belong to the state completely free of charge.

Could you please determine the “Frontera's” business interest, here if possible?

Less than half of the oil and gas extracted from this agreement is the share of “Frontera”. However, investments made through this share must be reimbursed and only then will it benefit from gas and oil. But the state, from the very first day of our work in 1997, has been virtually profitable, as the state has generated revenue since the Frontera began operations in the country, and this is about $ 30-40 million a year. And in 2013, although there were always some difficulties, and this is natural, because such activities are always accompanied by certain difficulties, somehow we coped with everything, but since 2013, practically, completely new heights have been conquered by our problems, because it became very difficult to actually work with the Oil and Gas Corporation, the Ministries of Economy and Energy. And, every day, and every year, the work and investment environment where we found ourselves from 2013 onwards was getting worse and worse.

Mr. Zaza, we have the first listener online. Let’s listen and continue with my questions afterwards. 2 988 327 is the radio number of „Radio Tavisufleba” and our guest is Zaza Mamulaishvili, the head of "Frontera Risouris Georgia". good morning. You are on the air!

Hello, Mr. Zaza. Hello. My question is - how much oil was extracted in Georgia annually? And what does 1 drilling rig and an operation cost of vertical mineshaft?

Thanks for the question. 2 988 327 is the phone number. We listen to you, Mr. Zaza. Please, answer the listener

Pt.3

We thought that would be the case, because this is exactly the kind of partnership we have been working on since 1997. And, especially, even this period that you mentioned, from 2013, in 2004, we became the first company in the history of Georgia to mobilize capital on the stock exchange of one of the projects in Georgia, we did the listing for the first time and it was then about $100 million. It happened for the first time in the history of the country and all this money was spent on the Georgian investment project and thus introduced Georgia to the stock market of the world capital. It was a huge success. Then, with this capital, with the money that was spent, it happened that we were very successful in drilling, seismic, research, and we found a very large supply of both oil and natural gas. And this stock has been confirmed by the most famous large American stock certification companies. And, that's why we thought it was such a great success not only for the company but for the whole country that we thought our partners in Georgia would present us in positive way, because we could also talk about it, of course, and by the way, on the London Stock Exchange, we were constantly talking about it because we even had an obligation to do so, but it didn't seem to be enough to make the public in Georgia better informed about our activities, which unfortunately is "better late than never", so now we've started talking about what we were doing, what we are doing and what we are going to do in the future.

Well, perhaps this is the result of this deficit, if you can say so, now, because that's ... how can I say ... Against the background of conflicting information and in such a situation you have to talk about the success or failure of the company in this case. However, let's use this time as much as possible to provide this information to our audience. Let’s be clear, to be somewhat brief, I understand that time is limited in airtime, how did it start? Under what conditions did it start? I mean in 1997. What property, what activities, what obligations are connected with the activities of "Frontera"?

Pt.2
Thank you so much for this explanation and let’s move on to the issue itself. Our audience, and the public, in general, has recently come to understand the name of your company frequently. In the last few years, it should be said that this is not a matter of the last year and the last months, the company has not gained relevance in recent months, your company is mentioned in the letters sent from the United States in the context of assessing the environmental benefits of investing in Georgia. Also, our listeners probably know that the case in the Arbitration Court is over and you and the applicant (in this case - the state, the Georgian company) have different assessments about the results of this case, how can both parties to the dispute shall consider the same decision successful. If you can tell us more about it, as well as the Georgian Oil and Gas Corporation and the agency, their representatives state (their last statement was on May 18, on their own page) that "Frontera” was trying to politicize the case from the beginning." If you can tell us more about it. It is also known that the corporation requests the disclosure of the arbitral decision and states that it agrees on it, but you refuse. If you can explain these issues.

With great pleasure. And, thanks for this opportunity, that I am able to explain exactly the issues that we often hear lately. To be honest, I wished that ... I would like the name "Frontera" to be more widely known as a result of the excellent results, after investing $ 550 million, we got it as a result of our work and created a huge value for the country.

What is the reason that the public, as you have mentioned, does not have this information?

This is probably our fault, because we have always thought that we would not produce advertising products because we are searching for and consuming oil and gas, so since we were not producing advertising products, we thought it would be unreasonable to be overly informed about our activities. Our partner, in this case the State Corporation of Oil and Gas, could have covered more broadly about the successes we have achieved over the years, and besides, Ms. Nino, we have been ...

Through all these years, Mr. Zaza? Periods are also important here, as your critique is more related to the period after 2013, and it is also mentioned in letters from the United States. Did you expect the corporation to take care of the success of this company all the time?

Translation #1 Transcript of Radio Interview around 1st June - Pt.1
The guest of today's program will be the head of the American company "Frontera Resources Georgia" operating in Georgia, Zaza Mamulaishvili. We will air him in a few minutes, but before that I want to provide you with updated information on one or two stories. After our broadcast yesterday, there was a small difference in statistics regarding the spread of coronavirus in Georgia.
(It then spends a few minutes clarifying the statistic issue)
As for the main issue of our program today and our guest, today we will talk about the company, the work of the company in Georgia and the ongoing processes around it, which have been mentioned many times in recent years in correspondence sent to the Georgian government by the United States Congressmen and not only. Today we are talking about the “Frontera”, which is associated with a number of questions. There are issues that cannot be discussed in public, however, we will try to get answers from our guest on the part that we can talk about and what we can share with our audience. “Radio Tavisufleba” is speaking, it is 10 hours and 6 minutes in Georgia and we continue the program "Dilis Saubrebi" (Morning Conversations). I welcome Mr. Zaza Mamulaishvili, the head of “Frontera Resources Georgia”. Mr. Zaza, Good morning.

Good morning, Ms. Nino.

I have one question at the beginning. Did I introduce you correctly as the head of “Frontera Resources Georgia”? Because the company has a number of registered names, in which "Frontera" is listed. On the part of it is your name, on other part of it is Nikoloz Mamulaishvili. Let's start from this, if you please.

Yes, you presented me correctly and I thank you for this.

As for the rest of the companies, are these interconnected companies or what they has to do with that. Please explain us.

Of course. “Frontera Resources Corporation” is a Texas-based company headquartered in Houston, Texas. I am the president and CEO of this company. The company operates in several different countries in the oil and gas exploration business and various subsidiaries carry out various types of work so that even in Georgia we are represented by several subsidiaries. These are “Frontera Resources Georgian Corporation”, “Frontera Resources US LLC”, “Frontera Eastern Georgia”. So it’s no surprise that we are represented by several subsidiaries during our 23 years of work in the country.

And is it related to the diversity of activities? In other words, what is the cause?

Yes, this is a common practice, because of the nature and type of activity, it is not uncommon to be represented by several subsidiaries. In particular, in this case, Ms. Nino, these subsidiaries are the parties to the agreements with the state, and under this agreement another operating company was established, called “Frontera Eastern Georgia”, and together with the Oil and Gas Corporation, it carries out oil and gas operations on be

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