16.Oct .2020 12:30

Frontera CEO: it does not seem real, the government to consider Outrider's demand

views 105

“It does not seem real, that the government will consider Outrider Management’s demand”, - Zaza Mamulashvili, general director of Frontera told BM.GE.

The matter concerns to the statement made by American investment holding Outrider Management.

According to the company’ statement, if a new license is issued on the oil extraction at the 12th license block, the new licensee must pay the same amount of money, that Outrider Management has invested at the company Frontera.
However, a few days ago the company Outrider Management applied to the Government of Georgia and demanded transfer of the oil extraction permit at the 12th license block.

According to the company, Georgia has the potential to produce up to 700 million barrels of oil, but it has a rather complex distribution structure. In addition, in the case of obtaining a license, Outrider Management announces study of the exact supply volume and bringing of an experienced operator in the country to perform the extraction works.

According to Outrider, their investment in Frontera turned out problematic, as Frontera accumulated debt of $ 35 million, for which Outrider Management was involved in a lawsuit.

"California-based investment company Outrider Management has already applied to the Prime Minister of Georgia, Giorgi Gakharia, to give the company the right for extraction of oil and natural gas from the 12th license block. As a result, Georgia will benefit from these resources, and the company itself will be able to return the investment made in the current license holder," company Outrider Management’s statement reads.

According to Zaza Mamulaishvili, CEO of Frontera, it is unlikely that the government will comply with Outrider Management's request to transfer their investment commitment to Frontera to a new company that will receive a license to extract oil in the country.

“It does not seem real, that the government will consider Outrider Management’s demand. There does not exist such practice that if a new company enters, it will have an obligation of former investor.

I can not imagine that if the government announces a tender on a new license, it will include commitments towards the previous shareholder. This is not accepted in practice, ”Zaza Mamulaishvili said.

For reference, The Hague Arbitration Court took decision on the dispute between Frontera and Georgian Oil and Gas Corporation in April 2020. However, dispute continued for several years for the breach of license requirements by Frontera.

The arbitral tribunal upheld Georgia's appeal, ordering the transfer of Frontera's license territory back to the state.

According to Zaza Mamulashvili, Frontera has already returned about 99% of this territory to the state by the decision of the arbitration court. Mamulaishvili notes, that the state can announce a new tender and bring a new licensee at that area. However, the license for attraction natural gas at the remained 1 % area is still valid.