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Posted Looed on the 8th August :-

Something new from Zaza? 'Breach' confirmed?
These are parts of a very long article on FRR from 23/07. It goes over a lot of stuff already reported, but in parts gives a slightly different spin on things - this is the first report I have seen that says Zaza apparently agrees that FRR committed a 'breach'

First - I have never seen this about part of the Block being sold off thus frustrating FRR operations -

Zaza says "Part of the territory of Block XII was sold to a third party [under the contract, Frontera owns wells, reservoirs, and oil and gas infrastructure in general, but not land], which resulted in our third-party infrastructure being virtually barred from us for years"

The article goes on to say the GOGC where mostly focused with getting back the uncontested lands, not the developed fields.

And now some Zaza quotes that seem different to other statements -

Frontera CEO confirmed that the arbitration had indeed instructed them to return the area beyond extraction and operation, but said that they had already planned to return the area - next year - and that he was reading the decision differently from the state.

Then the twist -

In an in-depth interview with Netgazeti, Zaza Mamulaishvili confirmed that the arbitral tribunal had found that Frontera had substantially breached the June 25, 1997 contract for the distribution of products and the processing plant. The difference, however, was in the reading of the outcome of the decision: in the GOGC's view, that decision was a sufficient ground for terminating the contract.

The company, on the other hand, told us that under one of the clauses of the contract they had the right to correct a substantial breach within three months, and if corrected, in that case the state would no longer have the legal right to terminate the contract.

However, as Vazha Khidasheli from the GOGC told us, this interpretation of the contract was incorrect and the record of "breach of breach" in the contract did not conflict with the possibility of terminating the contract."

On the 1% -

Zaza Mamulaishvili, as we have already mentioned, told us that we are talking about the return of the areas where the company did not intend to carry out the works and which it was going to return next year. However, it did not confirm that this part was 99% of the territory. As he told Netgazeti, this is not the part of the territory where the vast majority of oil and gas supplies / resources / reserves are mobilized" He said they did not have to return the territory that was fundamentally important to them.

https://netgazeti.ge/news/469720/

Posted Looed on the 6th August :-

Pt.6

J1 - Did you carry out this work?

Zaza - We conducted 25 times more. We did a $ 560 million job. Whatever commitment we had, we exceeded it 25 times and got an excellent result. By the way, one thing I want to say is very important to the viewer. In Texas or Oklahoma, for example, a company like ours that confirms such supplies and that third party confirms such supplies, the farmers on whose lands are located on these minerals, they get rich very quickly. Although the state does not give us the right and we do not drill many wells now because such an unreliable environment has been created for us to work. Nevertheless, in order for Georgia to legalize the right to minerals to those farmers who own land and work in the Sagarejo and Dedoplistskaro districts, because we will confirm that there is gas and oil, these people will suddenly become rich. Because that land will be interesting not only in terms of agriculture but also in terms of minerals. That's how the whole of Texas got rich, that's how the whole of the United States got rich. And, our half a billion investment has already created this wealth for the people.

J1 - Is it clear. Also, people, since you talked about this topic, I should definitely ask you. There was quite a problematic moment for your employees when they said they could not get paid. How did you handle this issue?

Zaza - By the way, I belong to the group of 70 people who did not receive a salary. I am one of them. And, it happened because for 23 years we were all getting minute-by-minute salaries, bonuses, insurance premiums, and so on. But, after the state completely illegally froze our bank accounts, closed our exports illegally, completely illegally does not pay our VAT debt, which already exceeds 25 million GEL and is fully consciously conducting this disinformation campaign, how should the company pay the Wage arrears in such conditions?

J1 - Do you still not pay the wage arrears?

Zaza - We can not pay even now. Our accounts are frozen. The government is still not fulfilling the condition stipulated in the contract. Even now we have been blocked from exports completely illegally. Even now we are not paid our accumulated VAT.
Is it clear. At the end of our conversation, I should definitely ask you, what are your plans? What are you going to do besides waiting for you to publish an arbitral decision?

J1 - It will take us about a couple of weeks to go through these legal nuances with some stakeholders and then we will be able to make it public if there is consent from the other party, which by the way we are ready for today. We say and call now, live, to meet and make a joint statement about the decision, but we are refused.

Posted Looed on the 6th August :-

Pt.4

J1 - However, the government says that it is not enough to prove that there is actually a significant amount of gas in the field.

Zaza - I do not know who you mean when you say "the government says" ...

J1 - Ministry of Economy

Zaza - Even the Ministry of Economy. I do not know at the end which competent person looked at that technical data. I do not remember anything to be too much like that, but ...

J1 - To whom did you submit this data?

Zaza - But as it works in the global industry, when a company drills, does testing, puts in results, then goes to a third independent party. This third independent party is the 2 largest American companies in the world that came, checked this data for 1.5-2 years and confirmed to us that there really is an opportunity to extract 350 billion cubic meters of gas.

J1 - And why does the government not allow you then?

Zaza - This is something you should probably ask the government. We have been illegally seized accounts, we have been illegally banned from exporting, we have not been illegally given a drilling permit. Here is an example. When we decided to connect a gas field to a gas distribution network after testing successful gas wells, we were not allowed, illegally and contractually, to build a pipeline until the Senate, Congress, the administration intervened in Washington, and only then did the construction take place.

J1 - So now you have the right to build a gas pipeline and are you going to start?

Zaza - No, wait a minute. When we built this gas pipeline, the government no longer allowed us to pass our own gas into our own-built gas pipeline, until the United States government intervened again in order to make the Georgian government to give us the right to do so.

J1 - So, the gas you extract is supplied to the system? Did I understand correctly?

Zaza - Yes, it is now

J1 - What is the volume?

Zaza - This amounts to several million cubic feet per day. This is a pilot program and one of the parts of the test, which gives additional confidence to everyone that in case of commercial gas extraction, we can successfully supply the Georgian market.

Posted Looed on the 6th August :-

Pt.3

J1 - How much is such an area?

Zaza - It is difficult to calculate this because if we subtract cities, mountains, villages, rivers and reserves, it could be half the area where we work now.

J1 - A statement from the agency said, "We urge you to take advantage of the goodwill shown by the government to continue mining in the following areas: Mirzaani, Tibaani, Patara Shiraki, Baida, Nazarlebi and Mtsare Khevi." So, these are the deposits that you do not return by arbitration. Do you return the rest?

Zaza - We return the rest of the search area. Now here is a very important nuance. Since the government launched the lawsuit against us, the government has spent GEL 42 million on all of this, of which GEL 30 million has been paid to their American lawyers in legal services, and about GEL 12 million of this is from lobbyists, experts, specialists and other lawyers.

J1 - However you also have lobbyists quite influential if we recall the statements of the senators.

Zaza - Before we get there, I will finish this sentence first. 42 million in exchange for spending, practically, the Government has not received anything. Now they want to create something. 99% of something was recovered and do not forget that this is an area where for years it was said that there is no prospect of discovering oil and gas in these areas. They want to justify it now.

J1 - The position of "Frontera" is also very interesting. In fact, since this company appeared in Georgia, the question is - what is this company looking for? And if it searches, why can't it find anything? There was an opinion that all this is happening in order to raise prices on the stock exchange. What is the interest of the company in Georgia? Specifically, is there a realistic hope of finding something?

Zaza - The huge result we have at the moment as a successful drilling, seismic or mining campaign is that we have been confirmed and third independent parties have confirmed our oil and gas reserves. Which means the following: in terms of gas, it is 350 billion cubic meters of gas, extractable reserves, which if we take into account the current consumption of Georgia, which is 2.5 billion a year ...

J1 - And why not start an extraction if it exists?

Zaza - It be enough for for Georgia for 150 years. You will not be able to start extracting gas unless the government gives you the right to drill a gas well. We have had this problem for the last 10 years.

Posted Looed on the 6th August :-

Pt.2

J1 - What is written in the arbitral decision is the most interesting issue. Especially since you are also calling on the government to uphold the arbitral decision, the government on the contrary is urging you to uphold the arbitral decision and publish what you are not doing and the government is not doing. By the way, the latest statement from the agency says that if you do not publish, they will consider the silence as consent and will publish it themselves. What is written in this report?

Zaza - This is a very interesting explanation, legal or contractual, to perceive silence as consent. Such a thing does not happen. How to get silence as a sign of consent is unclear. However, we are not against the publication of this conclusion, but for publication it is necessary to go through several legal formalities. what does this mean? This 152-page report contains a lot of personal information, commercial secrets, technical details that the various parties mentioned in this 152-page document should legally agree with them, and as soon as this period is over within the next few weeks ...

J1 - So you are planning to publish it?

Zaza - Of course.

J1 - Can you at least share some details of what the final conclusion is, because we hear from the government that the state has won the dispute against Frontera, we hear from you that there is no legal basis for termination of the contract. Actually, these are 2 completely opposite statements. What conclusion can we, the community, draw, who are not familiar with this contract?

Zaza - You mentioned the state and the state lost, Georgia lost, Frontera lost, the State Oil and Gas Corporation lost, and the country in general lost because ...

J1 - That’s in terms of investment, though at the contract level who lost?

Zaza - Neither 99 nor 1, nor 60 or 40% is mentioned anywhere in the contract itself. These are fictitious figures, I can not tell you what they are calculating, but the main point is this - the main 14 complaints filed by the Georgian government against us in the Stockholm Arbitration were. The main requirement of these 14 claims was that the contract be terminated for us ostensibly due to a permanent breach of contract terms, which was not upheld by the arbitral tribunal. The second claim, also the most important, was that we were fined about GEL 320 million for our government for allegedly breaching the terms, which was also not upheld by the arbitration. Arbitration did not satisfy 12 out of 14, but did satisfy 2. Now what are these 2 requirements? One is to pay an subsoil fee of about $ 200,000, which we have been paying in advance for 22 years and have no plans to appeal. And secondly, the arbitration ordered us to return the territories where we do not carry out exploration and extraction work to the Ministry of Economy.

Posted Looed on the 6th August :-

Translation #23 Business Formula with Zaza, 17m46s, 27/07
Pt.1

J1 - The American oil company "Frontera" again assesses the steps of the Georgian government as a disinformation campaign. The government's statement, despite the end of the arbitration dispute, not to terminate the contract with "Frontera" and to leave it the right to continue the search for 1% of the transferred deposits, came as a surprise to "Frontera". While the government sees the move as a goodwill gesture, „Frontera“ insists there has never been a legal basis for unilaterally rescinding the agreement. The opposing parties call on each other to uphold the judgment of the arbitral tribunal, although both parties have refrained from publishing it at this stage. Actually, what is written in the verdict? What arguments do both sides have? We wanted both sides to be on the air today, but only Frontera agreed to comment, with the State Oil and Gas Agency declining to comment. Zaza Mamulaishvili, President of "Frontera Resources" joins us. Hello. Thank you so much for your time and for being our guest. First of all, why was it unexpected for you this statement that the Minister of Economy made at the end of last week and said that the contract will not be terminated despite the court ruling and you will be left with the right to continue working at 1% of the area you were given earlier?

Zaza - Thank you so much for this opportunity. The first thing that came as a surprise to us was the statement they made 2 or 3 months ago, stating that it was as if they had to unilaterally terminate the contract for us within 90 days according to the contract or the court decision. Such a thing is not provided for anywhere in the arbitral decision, nor in the contract signed with the state, nor in the law. And, that was the first surprise. And, now it's been exactly 3 months, 90 days since the announcement was made and it was also unexpected when the Prime minister made an announcement a few days ago when they indicated that they were not going to expropriate our activity.

J1 - However, only 1% actually?

Zaza - Now before I answer ... However, as soon as the Prime Minister made this statement publicly and stated in front of the US Ambassador about what kind of government it has and how they welcome American investments, on the very next day the Ministry of Economy sent us an official letter saying the opposite.

J1 - What is written in the letter?

Zaza - The letter says that they decided to do the expropriation on June 27, otherwise this day could come on the 29th, or in August, or in 3 months. So that it is completely unclear what served either the Prime Minister's statement or the letter we received the next day from the Ministry of Economy. But, to sum it up, neither before nor now, they have no right to do so.

Posted Looed on the 6th August :-

More pressure?
This is a new report - but not sure the story is wholly new as the "295 votes to 125" bit feels familiar.

The U.S. House of Representatives amended the U.S. Defense Authorization Act (NDAA) H.R. by 295 votes to 125. 6395), which envisages monitoring the implementation of democratic institutions and electoral reform in Georgia.

Under the direction of the Congress, the Secretary of State should report to the relevant committees on whether the Georgian government is taking effective steps to implement electoral reform, ensure the independence of the judiciary, promote media freedom, and protect the rights of political and civil activists.

For the first time in a long-standing relationship between the two countries, a similar entry was made to Georgia in the US Defense Authorization Act.

"The United States must support the continued development of democratic values ??by the Georgian authorities, the path to electoral reform, the commitment to fight corruption, and efforts to ensure that the Georgian private sector adheres to internationally recognized standards, including an environment conducive to foreign direct investment. ..

No later than 180 days, the US Secretary of State shall submit to the relevant committees of Congress a report containing:

1. Analysis of whether the Georgian government is taking effective steps to establish democratic institutions in the country

2. Analysis:

A) whether the Government of Georgia is effectively implementing electoral reform

B) whether it respects the independence of the judiciary, including from the interference of the legislature and the executive branch;

(C) whether it effectively takes the necessary steps to ensure accountability and transparency, including unrestricted access to public information.

D) Ensuring the protection of the rights of civil society and opposition political parties and freedom of the media; And

E) any other relevant issue that the Secretary of State deems necessary ", - we read in the draft law.

Over the past year, US congressional legislative documents have repeatedly seen records of the exercise of oversight functions over Georgia. Congressmen are increasingly asking for the Secretary of State to report on current events in Georgia.

On July 25, 2020, the US House of Representatives approved a bill that would provide for a 15% suspension of aid to Georgia.

The case concerns a bill that states that the disbursement of $ 15 million of the $ 135 million provided to Georgia may be suspended until the US Secretary of State determines that Georgia's central government is taking effective steps to develop democratic institutions, fight corruption and ensure the rule of law in the private sector.

If the bill is approved, the United States may freeze $ 20,253,750 in aid to Georgia and stop issuing it.

https://formulanews.ge/News/34701

Posted Earsbern on the 6th August :-

The breach, California and the liquidation.
When someone accepts a directorship of a company, then they automatically accept it as a fiduciary duty. This means that they are legally obligated to give that organisation priority over their other considerations, particularly financial ones. To this end, they have to avoid any conflict of interest, particularly in terms of insider dealing or having an active financial stake in a company with an opposing interest.

That's the law, and it appears obvious that Hope, et al, are breaking it, as FRR are claiming in their court case. From the latest activity in California, it seems clear that FRR have been successful in collecting the necessary evidence in proof of that claim. And everyone, even Hopes' Dopes (who ran away on merely hearing that news), knows what the verdict is likely be. Breaching fiduciary duties is a very serious offence - in legal terms it is actually described as 'unconscionable'. On being found guilty, Hope/OMF will be held responsible for all the expense which they have caused FRR through their illegal breaching activity, so will be held liable for all of FRR's legal costs in all those American court cases where the 2 sides have crossed swords on the matter. They will also probably have to pay over $50 million in damages. Great.

But what does that mean for the current position in Georgia? Although Hope/OMF, I believe, have not made any profit from FRR, according to law any profit that they would have made from their legally 'unconscionable' offence would have to be paid to FRR, along with damages. Hope/OMF currently have ownership of FRCC, which they gained via the illegal breach. If FRCC was liquidated prior to completion of the Cali case, the same rules would apply - any profit gained from FRCC, or it's liquidation, would have to go to FRR, along with any damages caused by that liquidation. (Oh dear, think of how much that could cost!).

We know to our cost that Hope's lawyers are pretty capable, so they will know all of the above. If they don't, I'm quite sure that the 7 attorneys currently employed by FRR would be pleased to make them aware of the perilous position that they (Hope, et al) are now in. I very much doubt that the liquidation, and any complications arising from it, will occur. It would suit the interests of neither Hope nor FRR, and I think Hope would come off much the worst. (The liquidation started about the turn of the year, and seems to have stalled. Perhaps we now know why).

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