Oilex (ASX:OEX, LON:OEX) has told investors that Autoridade Nacional do Petroleo (ANP), Timor-Leste’s national petroleum authority, has issued a notice of intent to terminate the JPDA 06-103 production sharing contract.
Yesterday, Oilex revealed it intended to seek the termination amid concerns over the security of the production sharing contract’s (PSC) tenure.
It said the issues, such as formal arbitration between the government of Australia and the Timor Leste government, were outside the control of the company.
The ANP previously rejected the JPDA 06-103 joint venture’s request to terminate the PSC by mutual agreement, in good standing and without penalty. Instead, the ANP’s notice asserts a US$17mln claim against the joint venture, which amounts to US$1.7mln for Oilex’s 10% interest in the venture.
According to ANP the claim relates to the estimated cost of exploration activities not carried out in 2013 and other obligations set out in the contract.
In a stock market statement Oilex said: “The company has not provided for a monetary settlement in its accounts and given the significant overpayment in the work programme would not anticipate making such a provision.”
Oilex added that the joint venture had previously requested credit for excess expenditure on the approved work program, amounting to US$56mln, and this remains unresolved.
“The Notice does not include any reference to, nor allowance for, credit for excess monies which have been spent by the Joint Venture during the PSC term,” the company added. “Oilex considers such excess expenditure should be included as part of any financial assessment incorporated in the termination process.”
ANP has given the joint venture partners until June 12 to submit a written response.
In the meantime the PSC remains formally suspended until July 15.
