LONDON - Genel Energy PLC (LSE:GENL) has lost an arbitration case to the Kurdistan Regional Government (KRG) over the Bina Bawi and Miran production sharing contracts (PSCs), the company announced on Monday. The London Court of International Arbitration ruled in favor of the KRG, upholding the government's right to terminate the contracts.
The dispute began in December 2021 when the KRG sought a declaration to end both contracts with Genel's subsidiary, Genel Energy Miran Bina Bawi Limited (GEMBBL). Following the KRG's action, Genel accepted the termination of the contracts due to what it considered were repudiatory breaches by the KRG and filed a counterclaim for damages for the loss of rights to develop the fields.
The Tribunal dismissed GEMBBL's counterclaim and reserved judgment on the allocation of arbitration costs for a future award(s). Genel's Chairman, David McManus, expressed disappointment with the Tribunal's decision and stated that the company would provide a market update after a thorough analysis of the Award.
The arbitration's outcome may have implications for Genel's operations and strategic planning. The company had previously seen the Bina Bawi and Miran fields as significant assets within its portfolio. The loss of these contracts could prompt Genel to reassess its position in the Kurdistan region and its broader business strategy.
The decision underscores the inherent risks associated with international oil and gas contracts, particularly in politically complex regions. While the specifics of the arbitration costs remain undecided, Genel's acknowledgment of the verdict reflects the company's commitment to transparency and legal process.
Investors and industry observers will be looking to Genel for its next steps, as the company navigates the post-arbitration landscape. This development is based on a press release statement from Genel Energy PLC.
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