By Sue-Ann Wayow
MORE than $100million and a new ten-year Enhanced Production Services Contract (EPSC) with Heritage Petroleum will be granted to A&V Oil and Gas Ltd by the Trinidad Petroleum Holdings Ltd (TPHL) company board.
In a release on Tuesday, TPHL stated that the agreement will have “a very good outcome for Petrotrin and T&T.”
A&V Oil had been a good long-standing partner in Petrotrin’s joint venture programme, which continued to be a crucial component to the production of oil in the country, TPHL stated.
The settlement comes as a result on June 11, by the arbitration panel in favour of A&V Oil in which the arbitrators, headed by former president of the Caribbean Court of Justice, Sir Dennis Byron, found that Petrotrin failed to establish that A&V Oil was engaged in seal-tampering or any other inappropriate practices in the process of the delivery of crude oil to Petrotrin during the period from April 2016 to July 2017.
TPHL stated that while it was going against the advice of the legal team, the consequences have been considered.
TPHL stated, “To assist with its considerations and having regard to the view of the legal team, the board sought not only one but two legal opinions, one from Rolston Nelson SC, a leading Senior Counsel in commercial law, a former Justice of Appeal and a former Judge of the Caribbean Court of Justice, and Simon Hughes QC a leading Silk specialising in arbitrations in the construction and energy sectors in the United Kingdom. It was the opinion of these senior specialist attorneys that further litigation was not advisable, the chances of success were low, and settlement of the matter should be pursued.”
TPHL added that the legal costs and time already incurred in this matter were already very significant and if Petrotrin were to continue to be unsuccessful in the lawsuit, the cost to the company would be over $1 billion.
TPHL stated, “It should also be mentioned that currently, the TPHL Group is pursuing refinancing of all of its debt. The board was made aware by TPHL’s international financial advisers that the prospects for favourable terms are threatened with pending litigation of this magnitude; more so if findings were to once again go against Petrotrin.”
TPHL noted that Heritage has introduced and implemented modern production measuring tools which TPHL said will significantly reduce the risk of similar disputes in the future.
“What now remains to be settled is the question of costs of the arbitration, which is likely to be substantial, and is for Petrotrin’s account. The parties are currently exchanging supporting documents and attempting to arrive at a negotiated position. If this is not possible, the parties will return to the arbitration panel for its assistance in the assessment of those costs,” TPHL stated.
The issue was raised over four years ago by Opposition Leader Kamla Persad-Bissessar stating that “fake oil” involving Prime Minister Dr Keith Rowley’s self-proclaimed friend, AV Oil CEO Hanif Baksh.
The settlement includes:
(i) The payment to AV Oil of the sums already awarded by the arbitration panel for crude oil already supplied.
(ii) Payment to AV Oil of the sum of TT$18 million in full and final satisfaction of any and all damages suffered by AV Oil in connection with the termination of the IPSC.
(iii) Payment to AV Oil of a sum of money to be agreed by the parties representing reasonable legal costs and expenses incurred by AV Oil in the arbitration proceedings or such sum to be assessed by the tribunal in default of agreement.
(iv) Heritage to grant an Enhanced Production Services Contract (EPSC) to AV Oil for a period of ten years.
(v) AV Oil accepts and acknowledges that Petrotrin shall not be liable for and shall not pay any losses for mobilisation or demobilisation costs and expenses claimed by AV Oil in the Arbitration and AV Oil hereby waives and relinquishes any call for payment in relation thereto including its request for the sum US$460,000.00 as made in the arbitration proceedings before the tribunal.
(vi) AV Oil agrees to pay to Petrotrin all outstanding oil impost fees under the IPSC in the sum of TT$660,000 and fees for Head Licence and other fees in the sum of US$164,000 within the first full month of AV Oil’s payment advice under the new EPSC.
(vii) AV Oil agrees to pay the outstanding funds for abandonment expenses under the IPSC sub-licence in the amount of US$2.2 million.