PetroNor restarts arbitration for two Senegal offshore blocks

Oil and gas company PetroNor has revealed that it has restarted the formal arbitration process related to a dispute for two offshore blocks.

Illustration; Source: PetroNor

The two blocks in question are the Rufisque Offshore Profond (ROP) and Senegal Offshore Sud Profond (SOSP) blocks. The dispute between PetroNor and Senegal authorities started in late 2017 when the SOSP production sharing contract expired, and African Petroleum applied to enter into the second renewal phase of the contract.

Location of disputed blocks; Source: African Petroleum

In January 2018, formal notices of dispute were lodged with the Senegalese authorities in respect of the SOSP and ROP PSCs and the parties had three months to resolve the disputes.

After the parties were unable to resolve the disputes in the defined timeframe, African Petroleum lodged a request for arbitration documents with ICSID in June 2018.

The issue was pushed further by Senegalese authorities in November 2019 after it included the disputed SOSP block in a licensing round covering all open offshore blocks in the country.

In May 2020, PetroNor suspended the arbitration for the blocks to reach a satisfactory outcome for all parties. At the time, a formal request has been lodged with the International Centre for Settlement of Investment Disputes (ICSID) to suspend the process.

PetroNor said on Monday that it was unable to reach a satisfactory solution with Senegal through the suspension period and would recommence the formal arbitration process.

Through the prolonged suspension period, the company has made significant efforts to reach a mutually beneficial solution and has held numerous progressive meetings with the relevant authorities to no avail”, the oil and gas company said.

PetroNor added that, while disappointing that a settlement could not be reached, the board and its legal counsel remained wholly confident in its legal position and look forward to progressing the arbitration to an independent judgement.

Eyas Alhomouz, chairman of PetroNor, said: “We had hoped for a different outcome given our proactive and flexible efforts and the progress of discussions in recent months that would have seen a deal that preserved the value for the people of Senegal.

However, we have not been able to find a middle ground. Negotiations have undoubtedly been hampered by several factors including the inability to travel to Dakar because of the pandemic and ministerial changes throughout negotiations.

The strength of our position has not changed, and we will now progress this through the independent channels as we seek to retain the value of this investment for the benefit of our shareholders. We also remain open to re-engagement if the Government can table a solution that is mutually beneficial for our company and the people of Senegal.

We have had an extensive dialogue with and support from the President’s office and the ministry, however, as the Senegalese party has not been able to move the dialogue forward, the process is now to return to arbitration”.