Indonesia’s Medco Energi has started international arbitration at the ICC against the National Oil Company of Libya to enforce its contractual rights under an exploration and production sharing contract, as well as protect its right to benefit from its investment in Area 47 in the north African nation.
Arbitration started at the International Court of Arbitration on 15 March 2022, Medco reported in its 2021 annual report last week. The decision to arbitrate was taken in response to the NOC’s attempts to circumvent its obligations under the contract and its further attempt to prevent Medco from fully participating in the development and exploitation of Area 47 by, instead, seeking to develop Area 47 for the NOC’s sole benefit.
In 2013, Medco Energi, announced the official establishment of the Joint Operating Company for Area 47 with its partners, the National Oil Corporation of Libya and the Libyan Investment Authority.
In 2020, Medco was reportedly seeking to divest its interest in Area 47.
According to Medco’s website, since obtaining its participating interest in Area 47, Libya, from 2005 until 2009 the company, together with Verenex, drilled a total of 20 exploration wells and 6 appraisal wells, with 18 of the exploration wells showing indications of considerable oil reserves. The exploration success rate of 90% is well above the global average success rate. According to a D&M report dated 30 September 2008, a total gross discovered 2P reserves of 282 MMBOE and gross contingent resources of 211 MMBOE are estimated in Area 47. Following the acquisition of Verenex’s interest in Area 47 by the Libyan Investment Authority (LIA) in 2009, Medco and LIA held equal portions of 50% participating interest in Area 47 Exploratory Block.
Medco said on its website that it is in discussions with the NOC for a fast track production facilities project plan.