Oil and gas exploration firm Cobalt International has yet to resolve a dispute with Angolan state-owned oil company Sonangol over impairment charges related to its assets in Angola.
To remind, Sonangol in August 2015 agreed to buy all of Cobalt’s 40% participating interest in Blocks 21/09 and 20/11 offshore Angola for $1.75 billion. A year later, it became evident that the deal was unlikely to close and the pair agreed for Cobalt to market its interest in the offshore blocks in order to sell them to a third party.
A dispute then arose after Cobalt took an impairment charge of $1.69 billion related to the company’s Angolan assets.
In March this year, Cobalt said that, given Sonangol’s failure to date to grant the extensions of certain exploration and development milestones that Cobalt believed Sonangol was required to grant Cobalt under the purchase and sale agreement executed in August 2015, the accounting procedures required Cobalt to record a full impairment of its Angolan assets at the time.
Given Sonangol’s failure to grant the extensions, Cobalt on March 8 submitted a notice of dispute to Sonangol. Cobalt then said that if Sonangol did not “timely resolve this matter to Cobalt’s satisfaction, Cobalt said it intends to move forward with arbitration.”
Then in May, Cobalt said it had filed a Request for Arbitration with the International Chamber of Commerce (ICC) against Sonangol E.P. for breach of the agreement.
Through this arbitration proceeding, Cobalt is requesting an award against Sonangol E.P. in excess of $2 billion dollars, plus applicable interest and costs. Cobalt also filed a separate RFA with the ICC against Sonangol P&P seeking recovery of over $174 million, plus applicable interest and costs, representing the joint interest receivable owed to Cobalt for operations on Block 21 offshore Angola.
In an update on August 8, Cobalt said: “With regard to Angola, the previously announced arbitration process between Cobalt and Sonangol is progressing as planned and currently the arbitral tribunals are being constituted.
“In addition, Cobalt recently met with representatives from Sonangol and the Angolan government and it appears that all parties share a common goal to resolve this matter amicably. However, until this matter is resolved in a satisfactory manner, Cobalt will continue to vigorously prosecute these claims in arbitration and seek all available remedies,” the company said.
Offshore Energy Today Staff