RoyalGate Energy has informed Equatorial Guinea that it intends to begin arbitration over Block Z, alleging “material breaches” from the Ministry of Mines and Hydrocarbons.
RoyalGate claims the company’s licence on the block was legitimately extended in 2020, under a two-year extension policy. However, it went on to state, the ministry renamed Block Z as Blocks EG 18 and EG 31 – awarding them to Africa Oil in 2022.
According to Africa Oil’s reporting on its Equatorial Guinea assets, RoyalGate’s former licence equates to EG 31. EG 18 is further to the south, adjacent to blocks owned by Kosmos Energy.
The signing and award of the licence with Africa Oil effectively terminated the agreement with RoyalGate, the latter said.
Material breach
“Therefore, we categorically state that this purported termination of our PSC is ineffective, unlawful and constitutes a material breach of the PSC,” a letter seen by Energy Voice and addressed to Minister Antonio Oburu Ondo states. The letter is dated February 13.
It goes on to say that it is issuing a notice of dispute, under Article 26 of its licence, to dispute the process. The ministry, RoyalGate said, has refused to engage on an amicable resolution. It seeks “adequate compensation for significant damages occasioned by your material breaches”.
RoyalGate copied the letter to Africa Oil CEO Roger Tucker and general counsel Joanna Kay.
RoyalGate’s Block Z covered an area of 1,083 square km. It has the Zafiro field to its west and Alba to its north, with pipelines running through the block to reach the Punta Europa export facility.
The company signed an exploration agreement in 2013. It has described Equatorial Guinea as “core” to its strategy. RoyalGate had talked of a plan to drill the Z-1 well.
Africa Oil is in the midst of farm-out talks on its two blocks. Should these be successful, the independent has talked of drilling a well within 12-24 months. The company had no comment on RoyalGate’s move.
Updated at 4:33 pm with no comment from Africa Oil.