Outrider Management LLC, a California-based investment firm, has asked Georgia Prime Minister Giorgi Gakharia to award it the license to produce oil and gas from Block 12 in the country’s Karu Basin. The award would allow Georgia to derive more value from the field and enable Outrider to recover its investment in the troubled company that currently holds the license. Outrider is the largest stakeholder in the existing licensee, Frontera Resources Corporation, and has sought Frontera’s liquidation over the firm’s unpaid debts, which now total over $35 million in principal and interest. As a result, Georgia will benefit from obtaining these resources, and the company itself will be able to repay the investment made in the current license holder company, – said in a statement.
Minister of Finance Ivane Machavariani told BM.GE, that Georgia is honest with Frontera and despite the fact that the government has been “taking care of the investor” for years, the company had not fulfilled its obligations.
As for the government’s response to Outrider Management’s request, Ivane Machavariani says that they are aware of the dispute between Frontera and Outrider Management and the Georgian government’s response depends on the outcome of the dispute.
However, the Minister doubts that any obligation will be imposed on the country.
“We are waiting how the dispute between the parties will be resolved. If any obligation is imposed on Georgia, we will fulfill it. However, I think, that transfer of the 12th license block to Outrider Management will remain at the discretion of the Georgian government.
In all cases, after the dispute is over we will discuss the matter and the government will make the decision that is most optimal and acceptable for the economy. We will not transfer assets or land to compensate someone. Two sides are arguing, one partner caused a loss of another partners and why should we transfer the territory to dishonest company instead of good one?! If Outrider Management turns out a good company, we will think about this issue, but now the context is different – Georgia will not compensate for the violation of “Frontera” or someone else. To summarize, first the dispute will be resolved and then we will look at this issue from a completely different perspective, “said the Minister of Finance.
According to Minister of Economy and Sustainable Development, as a result of an arbitration dispute at The Hague, the Arbitration Tribunal upheld the legal position of the Georgian side against Frontera Resources Georgia Corporation and met all the requests, including breach of contract by Frontera, which gave the state an unconditional right to terminate it.
“We pay so much attention to the work of American companies in Georgia that we have shown goodwill and have not terminated the contract with Frontera. We allowed the company to continue working in the mining area, where the deposits were discovered during the Soviet period.
It is very unfortunate, but Frontera chose to politicize the issue instead of responding positively, to fulfill its obligations, take care of its employees and the difficult environmental situation caused by its inaction. The representatives of the company used practically all the opposition tribunes and tried to discredit us.
They have expended considerable resources in spreading their false and practically unjust accusations among lobbyists.
As it turned out, we were not the only ones who saw that the company “Frontera” was lying. Of course, we do not enter into these international disputes, as they are taking place between different private entities. However, we will act accordingly to the final results”, Turnava noted.