Genel Energy PLC (LSE:GENL, FRA:4VL, OTC:GEGYY) told investors that it will take steps to protect its rights in the Kurdistan region in northern Iraq, after it received notice from the regional government’s Ministry of Natural Resources stating its intention to terminate the Bina Bawi and Miran PSCs.
In a stock market statement, it said: “Genel believes that the KRG has no grounds for issuing its notices of intention to terminate.
“Genel wishes to continue operations under the PSCs and to work with the KRG on the development of these fields. However, Genel will take steps to protect its rights under the PSCs and, if necessary, seek compensation, including for its material investment.
“As a first step, Genel intends to issue notice of dispute to the KRG under each PSC, contesting the right of the KRG to issue any such termination notice and, in doing so, trigger an obligation to hold good faith negotiations to resolve this matter promptly and without the need for either party to refer the matter to international arbitration.”
Genel highlighted its prior comments, in its half-year results, that it has found it difficult to engage the KRG under the PSCs to obtain the necessary approvals to proceed with the development of the assets.
It said that the company subsequently prepared and submitted proposals to the KRG, which honoured the terms agreed in September 2019, and would have seen the progression of the assets.
The company added: “Every effort has been made to obtain these [approvals] so that the projects can be progressed.
“Genel had earlier reached a commercial understanding with the KRG in September 2019 to develop the fields using a staged and integrated oil and gas development concept.
“In the course of those negotiations leading to updated terms of the parties’ agreements, the KRG confirmed to Genel that it would not serve notice of intention to terminate the PSCs while these negotiations remain ongoing.”
In London, Genel shares were down 10.4% in Friday’s deals changing hands at 121.8p.