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The state terminates the contract with Frontera Resources

By Anastasia Sokhadze
Friday, May 1
In 2017, the State and the Georgian Oil and Gas Corporation launched an international arbitration dispute against Frontera, which significantly hampered the Company's operations and inflow of the planned investments in Georgia.

A week ago, on April 21st, the Oil and Gas Agency and the corporation announced that the arbitral tribunal had supported their interpretation of the norms of the contract and had met the vast majority of their claims. They said the tribunal had found that Frontera had substantially violated the contract, which was reflected in the refusal to return the search area (99% of the entire licensed area) to the state.

According to them, Frontera was instructed to reimburse the amount of fee for the use of natural resources paid by the Oil and Gas Corporation, as well as the costs incurred by the plaintiffs in connection with the arbitration proceedings.

The company Frontera responded to this statement on April 29th. They said in their statement that the Georgian government and its lawyers had deliberately made incorrect public statements that would distort the results of the arbitration and the image of the company. According to them, the fake news spread these days and the public statements made by some members of the Georgian government contain an inappropriate attempt to insult the US government and discredit both them and other supporters of American business like Frontera.

Hours after the Frontera announcement, the State Oil and Gas Company issued a response statement calling them ‘false, inaccurate.’ At the same time, they noted that they are terminating the contract with Frontera. According to them, the arbitral award gives them the right to do so. But Frontera denied these accusations and claimed that they could continue working together.

According to the President of Frontera Zaza Mamulaishvili, the arbitration did not meet the main requirements of the agency and the corporation which concerned the financial part and the payment of $100 million.

“The most part of their demands was about how allegedly we didn’t pay the government specific fees, how we did not give our share of the oil and natural gas, so they demanded compensation for that money. But because these claims were made based on evidence, they did not have a leg to stand on and therefore, the court didn’t satisfy their needs,” stated Mamulaishvili.

Nevertheless, the Oil and Gas Company has stated that Frontera has already been notified and the contract will be automatically terminated on July 27th, 2020.

It is impossible to paint the full picture since only the positions of both parties are known, not the full information. The details of the arbitral award will be known only if both parties agree to make it public.

Frontera Resources is an American-based company that aims to extract oil and gas. The company Frontera Research Georgia started working in Georgia in 1997.