Shafaq News / The Kurdistan Regional Government rejected on Dec. 12 Genel Energy's claim for compensation for the termination of production sharing contracts at the Bina Bawi and Miran oil and gas fields and vowed to defend itself against the UK-based company's arbitration case.
The KRG's statement follows a Dec. 10 announcement from Genel that it intends to claim "substantial' compensation from the KRG in a London-seated international arbitration "to be commenced in accordance with the disputes process set out" in the production sharing contracts. Genel was not immediately available for comment.
"The government strongly denies that Genel is entitled to any compensation," the KRG said in a Dec. 12 statement.
"The government will vigorously defend any claim that is brought by Genel, and intends to pursue its own counterclaims for damages resulting from Genel's renunciation of the PSCs."
The dispute between Genel and KRG revolves around the delayed development of the Bina Bawi and Miran oil and gas fields, which has been in the works since at least 2014 with several amendments to the original agreement.
Genel said Aug. 20 it planned to take steps to protect its rights after the KRG terminated its contracts for the Bina Bawi and Miran oil and gas fields. It said it found it difficult to engage with the KRG on the contracts and was unable to obtain the necessary approvals to proceed with development of the assets.
"The government regrets that Genel has failed to offer any credible proposals to develop the Bina Bawi and Miran oil and gas fields, and notes that this failure has significantly delayed the ability of the government to develop those fields on a timely basis," the KRG said in the statement.
Genel, whose main operations are in Kurdistan, signed in 2017 production sharing contracts with the KRG for the development of the two fields following amendments to the initial agreement.
"Since entering into the PSCs in February 2017, Genel has made every effort to engage with the KRG on the development of the Bina Bawi and Miran fields and has submitted numerous development proposals to the KRG for its approval," Genel said on Dec. 10. "However, the KRG has for some time made clear its intention not to permit the development of the fields in accordance with the terms of the PSCs."
Genel is active in Iraq's semi-autonmous Kurdish region, with stakes in the Peshkabir, Qara Dagh, Sarta and Tawke fields.
Source: S&P Platts