Frontera may challenge Ukraine's result of Dolphin field PSA bids
The U.S. Frontera Resources Company with headquarters in Houston, Texas, acting as a bidder in the tender for hydrocarbon exploration under a production-sharing agreement (PSA) within the Dolphin Block of the Black Sea's continental shelf, said would prepare a court claim in case if the tender results to be approved by the Cabinet of Ministers, reads a press release from the company.
"Frontera Resources reserves the right to take legal action unless the [Ukrainian Energy and Coal Industry Ministry] Interagency Commission's conclusion in respect of the Dolphin Block tender is annulled. We are of the opinion that the tender preparation and management process was inconsistent with international practices," a report quotes Frontera CEO Zaza Mamulaishvili as saying.
According to the company, the Interagency Commission was supposed to have prepared and submitted their conclusions and recommendations regarding the winning bidder to the Government on or prior to July 13, 2019. However the Commission failed to properly meet the above requirements. Accordingly, the Cabinet's announcement of the winning bidder would contradict Ukrainian law.
"Thus if the Interagency Commission announces winners of the bids, it would violate the Ukrainian legislation," said Frontera.
As reported, on April 12, 2019, the Cabinet of Ministers announced a tender for the development of hydrocarbons within the Dolphin section on the Black Sea shelf under PSA terms. The term of the agreement is 50 years.
According to the draft resolution prepared for approval, the text of which Interfax-Ukraine has, the area located in the northwest of the Black Sea continental shelf is 9,772 square kilometers.
Presumably, the minimum investment should reach UAH 1.5 billion. The amount of total investment required to ensure industrial development will be determined by the results of the tender. The state's share in profitable products should be at least 11% of its total volume, the maximum investor's share is 70% of total production.
The term of the PSA is 50 years. The winner of the tender for the development of the shelf section will have to provide a geological study of the subsoil at the section, including the drilling of at least five wells during the first five-year phase of exploration.
On Juny 26, CEO and one of the shareholders of American Trident Acquisitions Corp. Ilya Ponomarev announced that the interdepartmental commission under the Ministry of Energy and Coal recognized the company he headed as the winner of the competition, recalling that the decision should be approved by the Cabinet of Minister
On July 27, Ukrainian Premier Volodymyr Groysman announced that he intends to offer the Cabinet to consider the possibility of announcing a new tender for the development of the said hydrocarbon section on the Black Sea shelf.
Frontera Resources Corporation, founded in 1996, is engaged in the exploration and production of gas and oil. The company's strategy is to search for prospects for the extraction of fossil fuel in the markets of Eastern European countries that belong to the Black Sea basin. The proven natural gas reserves of the company in Georgia amount to about 300 billion cubic meters.