Timor Leste Seeks Arbitration

Timor Leste’s petroleum regulator has filed for arbitration against AIM-listed explorer Oilex, the latter said October 17.

ANPM, the regulator, has requested the International Chamber of Commerce in Singapore to arbitrate over the termination of the Joint Petroleum Development Area (JDPA) 06 103 Production Sharing Contract (PSC).

As operator, Oilex on July 12 2013 filed a request to terminate the PSC by mutual agreement – without penalty – to ANPM owing to ongoing uncertainty arising from the maritime boundary dispute between Timor Leste and Australia. The dispute was settled by treaty only in March 2018. Oilex said that instead ANPM issued a termination notice in 2015 but with a penalty claim of $17mn plus interest against the licensees, this being its estimate of the cost of exploration not undertaken in 2013.

A decision from the arbitrator is not expected until 2020, said Oilex, adding that it was open to negotiation with Timor Leste in the interim. Oilex has recorded a provision of $0.6mn in its accounts, this being a 10% share of a proposed settlement offer made to the ANPM. Licensees in the JPDA 06 103 PSC, awarded 2007, are Oilex as operator 10%, Pan Pacific Petroleum 15%, Japan Energy E&P 15%, GSPC 20%, India’s Videocon 20% and Bharat PetroResources 20%. Oilex said it understands that Videocon is subject to insolvency proceedings but still trading.

Timor Leste's determination to see its share of gas from the JPDA monetised within Timor Leste was shown three weeks ago when it agreed to buy ConocoPhillips's 30% equity interest in the Sunrise gas development project for $350mn.