SULAIMANI (ESTA) — The Kurdistan Regional Government (KRG) denied on Sunday that it is in “repudiatory breach” of the production sharing contracts (PSC), which Genel Energy said Erbil had terminated in August.
On Friday, Genel Energy said it would start arbitration for “substantial claims” against the KRG over its termination of the PSC in August for its Bina Bawi and Miran gas projects.
In August, the firm said it had received notice from the KRG ministry of natural resources of its intention to terminate the Bina Bawi and Miran PSCs.
Genel said the KRG had “no grounds” for issuing its notices of intention to terminate.
However, the KRG said it had received a letter from a subsidiary of Genel Energy plc on December 10, stating that it did not intend to continue to perform its obligations under the Bina Bawi and Miran PSCs, and that it purported to terminate the PSCs with immediate effect.
“The Government understands that Genel Energy plc has made the same assertions in a public press release dated 10 December 2021,” it said in a statement.
“Genel’s letter and the related press release were prompted by the Government’s issuance on 5 December 2021 of formal Notices of Termination, which validly terminated the PSCs subject only to the completion of the dispute resolution process set out in the PSCs,” it added.
“Genel has sought to justify its termination of the PSCs by wrongly asserting that the Government is in repudiatory breach,” it continued.
The KRG said it “strongly denies that it is in repudiatory breach of the PSCs,” adding that Genel “has also falsely claimed that the Government stated it would not perform its obligations under the PSCs.”
“On the contrary, the Government has always acted in accordance with its obligations under the PSCs, and has consistently communicated the same to Genel.”
The Kurdish government further said it regretted that Genel had “failed” to offer any credible proposals to develop the Bina Bawi and Miran oil and gas field.
“This failure has significantly delayed the ability of the Government to develop those fields on a timely basis,” it added.
The KRG also denied that Genel is entitled to any compensation as a consequence of the termination of the PSCs.
“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.”
