By Rick Wilkinson - OGJ
Correspondent
Regulators
in Australia and Timor-Leste have now formally terminated Timor Gap
production-sharing contract JPDA 06-103, which leaves Australian companies Pan Pacific Petroleum
NL (PPP), Sydney, and Oilex Ltd., Perth, in breach of their obligations and
facing a possible financial liability.
Autoridade
Nacional do Petroleo (ANP), the designated authority of the Joint Petroleum
Development Area, issued the termination notice this week with the approval of
joint commissioners for Australia and Timor-Leste after warning the joint
venture last May (OGJ
Online, May 16, 2015).
The
PSC was signed in November 2006. Oilex with 10% interest was operator. Others
in the consortium were PPP 15%, Japan Energy Corp. 15%, Gujarat State Petroleum
20%, Videocon 20%, and Bharat PetroResources Ltd. 20%.
The
termination results from the JV’s breach of the terms of the PSC, including the
failure to meet the minimum exploration work program commitments. These
included the drilling of at least one exploration well, which had been
nominated as Bazarete-1.
There
could be a financial requirement to pay about $17 million to cover the cost of
exploration activities not carried out.
The
JV had previously requested credit for $56 million of excess expenditure on the
approved work program, but ANP refused.
The
Oilex group did drill two wells in 2009, but these were plugged and abandoned. When
the PSC was first suspended in 2013, Oilex had been trying to secure the Stena
Clyde semisubmersible rig to fulfil the requirements, but souring relations
between Australia and Timor-Leste at the time prompted the decision to leave
the permit.
Oilex
cited increased sovereign risk as Timor-Leste attempted to nullify the maritime
treaty between it and Australia.
Timor-Leste
rejected this as an excuse to avoid contractural obligations, adding it had
been more than patient with the Oilex group.
The
PSC area has now reverted to vacant acreage.
Oil & Gás Journal
– Melbourne July 17
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