Trinidad Petroleum Holdings Ltd says it has settled the arbitration dispute between itself and A&V Oil and Gas Limited.
In a release, it says the settlement is a favourable one, as it has avoided paying millions of dollars in damages.
It adds that as an indication of the “cordial nature of the settlement” Heritage Petroleum will now enter into an Enhanced Production Service Contract with AV Oil for the purchase of crude oil.
TPHL says the settlement is rooted in the partial award delivered on June 11th 2021 by the arbitration panel in favour of AV Oil.
The arbitrators, headed by former Caribbean Court of Justice President, Sir Dennis Byron, found that Petrotrin had failed to establish that AV Oil was engaged in seal-tampering or any other inappropriate practices in the process of the delivery of crude oil from April 2016 to July 2017.
The findings meant that AV Oil is entitled to payment of the sum of TT$84,699,879.47 that Petrotrin is holding in escrow in relation to the sums due on its unpaid invoices for the period 1st June 2017 to 31st December 2017 together with interest at the rate of 3% per annum from the due date of each invoice until the date when the principal sum was paid into escrow.
The arbitrators also awarded payment to AV Oil of the sums due on its unpaid invoices for the crude oil supplied by the company to Petrotrin during the period 1st January 2018 to 28th February 2018 in the amount of US$2,284,398.40 together with interest at the rate of 3% per annum from the date when each payment fell due until the date of the Award.
TPHL says the Board admittedly went against the strong views of its legal team and entered into discussions with AV Oil to explore the terms of a settlement acceptable to both sides.
According to the release, the resulting settlement is as follows:
(i) The payment to AV Oil of the sums already awarded by the arbitration panel for crude oil already supplied.
(ii) Payment to AV Oil of the sum of TT$18,000,000 in full and final satisfaction of any and all damages suffered by AV Oil in connection with the termination of the IPSC.
(iii) Payment to AV Oil of a sum of money to be agreed by the Parties representing reasonable legal costs and expenses incurred by AV Oil in the arbitration proceedings or such sum to be assessed by the Tribunal in default of agreement.
(iv) Heritage to grant an Enhanced Production Services Contract (EPSC) to AV Oil for a period of ten (10) years.
(v) AV Oil accepts and acknowledges that Petrotrin shall not be liable for and shall not pay any losses for mobilisation or demobilisation costs and expenses claimed by AV Oil in the Arbitration and AV Oil hereby waives and relinquishes any call for payment in relation thereto including its request for the sum US$460,000.00 as made in the arbitration proceedings before the Tribunal.
(vi) AV Oil agrees to pay to Petrotrin all outstanding Oil Impost fees under the IPSC in the sum of TT$660,000 and fees for Head Licence and other fees in the sum of US$164,000.00 within the first full month of AV Oil’s payment advice under the new EPSC.
(vii) AV Oil agrees to pay the outstanding funds for abandonment expenses under the IPSC sub-licence in the amount of US$2,200,000.
TPHL went on to say “There can be no doubt that the settlement of this matter, with the payment by Petrotrin of $18,000,000 in damages in addition to the sums awarded by the Tribunal to AV Oil for crude oil determined by the Tribunal to have already been supplied and received to Petrotrin’s benefit, is in the circumstances, a very good outcome for Petrotrin and Trinidad and Tobago.”