FOUR years after Petrotrin prematurely ended a contract with A&V Oil and Gas Ltd, in what became known as the “fake oil scandal,” the Petroleum Company of Trinidad and Tobago has settled an arbitration dispute between itself and A&V, with the former calling the settlement a “win-win for Petrotrin, TPHL and TT.”
AV will receive $18m as full and final payment for any and all damages suffered by it in connection with the termination of the production sharing contract.
The Petroleum company said this settlement avoids the payment of millions of dollars in damages to AV, money which was awarded by an arbitration panel. In addition to the $18m payment, A&V will get a new exploration licence with national oil company, Heritage.
The state company said it will enter into an Enhanced Production Service Contract (EPSC) with A&V Oil for the purchase of crude oil for a period of ten years as an indication of the cordial nature of the settlement.
On a political platform four years ago, Opposition leader Kamla Persad-Bissessar alleged that A&V Oil, owned by Nazim Baksh, was charging the State for oil not actually produced. Petrotrin subsequently investigated the claims and ended AV’s drilling contract for crude from the Catshill field in Rio Claro.
Petrotrin was later restructured with the interest vested in Trinidad Petroleum Holdings Ltd Group of Companies (TPHL). A&V Oil sought legal redress.
In June, A&V Oil successfully argued its case before an arbitration panel headed by former President of the Caribbean Court of Justice, Sir Dennis Byron. The panel said it found no evidence of corruption by A&V Oil.
The panel unanimously awarded a payment of TT$84,699,879.47 that Petrotrin was holding in escrow in relation to sums due on its unpaid invoices for the period June 1, 2017 to the December 31, 2017, together with interest at a rate of three per cent per annum, from the due date of each invoice until the date when the principal sum was paid into escrow.
Additionally, the arbitrators also awarded payment to A&V Oil of the sums due on its unpaid invoices for the crude oil supplied by the company to Petrotrin during the period January 1, 2018 to February 28, 2018, in the amount of US$2,284,398.40 together with interest at a rate of three per cent per annum, from the date when each payment fell due until the date of the award.
The State was urged to appeal the arbitration.
In a statement, TPHL said the settlement is rooted in the partial award delivered on June 11 by the arbitration panel.
It said it explored its options carefully, considering the consequences of having the award set aside which could have brought additional costs of over $1 billion, with little chance of success. The opinions of two legal luminaries – Rolston Nelson, SC, and Simon Hughes, QC, were sought.
“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 said.
The Boa
