FAR thinking of arbitration against ConocoPhillips over Senegal stake sale
- Project & Tenders
FAR Limited, an oil company owning a share in the giant SNE oil discovery offshore Senegal, has yet to resolve its dispute with ConocoPhillips regarding the latter’s 2016 sale of stake to Australia’s Woodside.
While ConocoPhillips’ divestment to Woodside has widely been perceived as a done deal, or at least it’s been reported on as such, FAR has disagreed from the start, and, according to the company’s annual report, an arbitration might be in the cards as well.
To remind, ConocoPhillips had in July 2016 agreed to sell its Senegal assets, including a stake in the SNE, world’s largest oil discovery of 2014, to Woodside.
FAR attempted to stop the deal, claiming the completion of the transaction between ConocoPhillips and Woodside was subject to the rights of partners to pre-empt and Senegal Government approval.
The partners in these three blocks are FAR, with 15% working interest, Cairn Energy, with 40% interest, and Petrosen (the Senegalese National Oil Company), with 10% interest.
Despite the claims by FAR, ConocoPhillips in October informed that the transaction was successfully completed for around $440 million, including net customary adjustments of approximately $90 million.
FAR then again said that it believed a valid pre-emptive rights notice had not been issued to the JV partners by ConocoPhillips and FAR “has invoked its right to resolve this dispute in accordance with the Joint Operating Agreement.”
The ASX-listed company on Wednesday released its 2016 annual report, in which its Chairman Nic Limb, dedicated a section to the dispute with ConocoPhillips.
Here is what he wrote in the report: “Our partner in the Senegal joint venture, ConocoPhillips, agreed to sell their 35% share at a price of approximately US$2.20/bbl of 2C resource at that time to Woodside Energy, a price that was surprisingly low and represented an attractive opportunity. The sale triggered the rights of partners to pre-empt and ConocoPhillips issued the pre-emption notice but on our expression of interest chose to refuse access to all of the required information.
“The fact that FAR has not been afforded these same terms and conditions as the purchaser has resulted in a dispute with ConocoPhillips pursuant to the joint venture agreement that at the time of writing, has not been resolved. This is a substantial matter financially which involves multiple parties including the Government of Senegal.”
“We have received much shareholder enquiry about progress however as you would appreciate it is difficult for us to comment but suffice to say we have positioned ourselves comprehensively from a strategic standpoint and retain the option to initiate international arbitration.”
“This has placed a very heavy additional work-load on our executive(s) and I am very proud of what they have achieved. It is worth remembering that none of this affects our current rights or position and is a matter of managing an opportunity that affords plenty of upside.”
Offshore Energy Today has reached out to ConocoPhillips seeking comment on FAR’s claims and whether the company sees the transaction with Woodside as completed.
A ConocoPhillips spokesperson responded:”We do not comment on matters in dispute; however, we will note that the terms of the relevant agreements and applicable Senegalese laws have been satisfied, and the transaction has closed.”
Offshore Energy Today Staff