The International Chamber of Commerce arbitration panel in London has found in favor of InterOil Corp. in its battle with Oil Search Ltd. over preemptive rights in Elk-Antelope gas field in retention licence PRL 15 onshore Papua New Guinea.
The arbitration panel dismissed Oil Search’s claim that it had preemptive rights over shares in the field.
The dispute arose early last year when InterOil sold interest in Elk-Antelope field and proposed LNG project to France’s Total SA. Total bought the InterOil subsidiary that held 40% stake in the field rather than buying the interest directly.
Oil Search contested the purchase, arguing that the deal was invalid and, as a joint venture partner with 22.8% of the project, it should have had the opportunity to preempt Total’s purchase.
The dispute hinged on the fact that Total bought the subsidiary. If it had bought the interest directly from InterOil, then InterOil would have been obliged to offer Oil Search an opportunity to match the offer.
Oil Search itself had bought into the project with a surprise tactical move in acquiring the 22.8% share held by minority partner Pac LNG Group Co. In fact, Oil Search used the same method as Total by buying Pac LNG.
Oil Search released a statement saying the judgement was both nonunanimous and complex. The judgement declared that Total had no rights in PRL15 or the Elk-Antelope joint venture unless and until InterOil and Total comply with relevant transfer clauses with the joint operating agreement.
Oil Search added that it expected that InterOil and Total would comply with these terms and it intended to work constructively within the JV to resolve all outstanding transfer and JV management issues.
The company now has a priority—as does Total and InterOil and the Papua New Guinea government—to complete the current appraisal program at Elk-Antelope and move into a development phase as soon as possible.
Source: Oil & Gas Journal