Algeria’s state oil company has been ordered to pay $290 million to a British energy firm which accused it of seizing control of its interest in a gasfield.
Sonatrach terminated Sunny Hill Energy’s contract for exploration and production in the Ain Tsila gasfield in 2021, prompting the London-based company to launch legal action.
Sunny Hill Energy said it had invested “hundreds of millions of dollars” in the project but Sonatrach “offered no compensation in relation to their seizure of the interest”.
The company had a 38.25 per cent interest in the Ain Tsila field, 1,100 kilometres south-east of Algiers, through its Petroceltic Ain Tsila subsidiary.
Angelo Moskov, Sunny Hill Energy chairman, compared Sonatrach’s behaviour to that of the former leader of Venezuela Hugo Chavez, who nationalised large parts of his country’s oil industry. Mr Moskov said Sunny Hill would be seeking $1 billion in compensation.
“Sonatrach has acted in an aggressive and irrational manner,” said Mr Moskov, a Bulgarian citizen who was a former Deutsche Bank AG trader.
“Their attempted expropriation of our interest without compensation is the type of action expected in Hugo Chavez’s Venezuela and not from a country like Algeria that proclaims to respect the rule of law.
“This unwarranted action will be highly damaging to the attempts by Algeria to attract foreign investment into the country.”
Mr Moskov said his company had met its contractual obligations including providing its full share of resources required for the operation of the joint venture with Sonatrach.
“We have strong legal advice that this action by Sonatrach is without legal merit,” he said.
But Sonatrach said the termination was in accordance with the contract, and that it had taken the step after Petroceltic failed to comply with contractual obligations.
Petroceltic had twice reduced its participation in the project, which was 75 per cent when the contract was signed, said the Algerian state oil company.
David Blewden, Sunny Hill Energy’s chief financial officer, has now announced the company “has received the award in the arbitration against Sonatrach”.
Petrofac won a $1 billion contract to build a gas processing plant as part of the project in 2019.
When the contract was signed it was agreed the plant would start producing gas, liquefied petroleum gas and condensate for the domestic and export markets.
Sunny Hill is owned by Mr Moskov’s London-based Worldview Capital Management LLP.
It acquired a stake in the Algeria project after a battle to take control of Dublin-based oil and gas explorer Petroceltic International Plc in 2015.
