Mubadala Petroleum is facing further problems in its effort to recover payments from a partner in one of its offshore oilfields in Thailand and might have to go to arbitration to resolve the issue.
The company, which is the international energy unit of the Abu Dhabi government's strategic investment company, Mubadala Development, has found itself pulled into a bitter dispute between its two partners in the Manora oilfield – the Sydney-listed Tap Oil, which owns a 30 per cent stake, and Northern Gulf Petroleum, controlled by the Thai businessman Chatchai Yenbamroong, which owns 10 per cent.
The dispute began with an attempt in February by Mr Chatchai, who is also Tap Oil’s largest shareholder, to replace the company’s managers with those of his own choosing.
It has also involved claims and counterclaims by Tap Oil and NGP of default on payments, which eventually resulted in Mubadala Petroleum demanding US$27 million from NGP on March 20 for payments required under the terms of the Manora contract.
NGP has since served a notice of default on Tap Oil for $14.6m that it claims it is owed after certain exploration goals on the field were reached.
In a letter to shareholders on Thursday, Tap Oil’s management disputed NGP’s claim, saying the payment was contingent on a final report on reserves by Mubadala Petroleum, which operates the field and owns a 60 per cent stake in the venture.
Tap Oil said that it had more than $25m of cash on hand but objected to NGP’s claims on the ground that the contractual obligations for payment had not yet been reached. Tap further claimed that NGP was still in default.
If true, NGP's default would already have exceeded 30 days on Thursday, which under the terms of the oilfield contract, would mean that NGP's share of Manora crude should be split between Mubadala and Tap Oil to cover payments.
The contract also states that after 60 days of default, NGP’s interest in the field would be transferred between Mubadala and Tap Oil.
In his own letter to shareholders three weeks ago, Mr Chatchai wrote, “NGP considers the default notice to be contrary to arrangements in place between NGP and Mubadala”, adding that NGP had “served Mubadala with a notice of dispute, which may result in arbitration in Thailand.”
He also claimed that Mubadala Petroleum had already filed its report on reserves in the field with the Thai oil ministry.
Mubadala Petroleum has largely kept quiet about the dispute but has acknowledged that Tap Oil’s public statements about the default notices were accurate.
“Mubadala Petroleum is operating within the clear parameters of the joint operating agreement that governs the partnership in Manora,” a Mubadala spokesman said on Thursday. “We take seriously the terms of that agreement, which include clear confidentiality clauses, and as such, I am afraid it would not be appropriate for us to comment on the exchanges between the partners.”
The Manora field is in one of seven offshore Thailand blocks in which Mubadala Petroleum has an interest, and one of four that it operates there. The field started producing in November at 2,000 barrels per day and is expected to peak at 15,000 bpd and run for about 10 years. It has estimated reserves of up to 20 million barrels.
The field is Tap Oil’s principal asset.