Primeline Energy has now completed all the procedures under the recently agreed settlement agreements relating to the disputes with Zhejiang Gas and China Oilfield Service Ltd (COSL).
As previously announced on March 1, settlement agreements were signed between Primeline and CNOOC China Ltd (CCL) and CCL with Zhejiang Gas relating to the dispute Primeline had with Zhejiang Gas with regard to the gas sale contract for LS36-1 off China and with COSL on the payment of the turnkey drilling contract.
On March 24 Primeline received the settlement payment with regard to Zhejiang Gas dispute and all the legal proceedings with Zhejiang Gas were withdrawn.
Subsequently, Primeline Energy Operations International Ltd. (PEOIL), a subsidiary of the company, signed a settlement agreement with COSL with regard to the payment due under the turnkey drilling contract and termination of COSL’s legal proceedings in China International Economic and Trade Arbitration Commission (CIETAC) against PEOIL.
PEOIL made a full settlement payment to COSL in early April and on May 26 Primeline received confirmation from CIETAC that COSL’s arbitration proceedings against PEOIL in CIETAC had been formally terminated. With this, all the procedures under the March 1 settlement agreement have now been completed.
As previously announced, however, the settlement with Zhejiang Gas and COSL did not affect the ongoing arbitration by Primeline against CNOOC and CCL under the petroleum contract in relation to the LS36-1 development and production which was started in June 2016.
In accordance with the CNOOC arbitration procedures, Primeline submitted the formal statement of claim (SOC), together with all supporting witness statements and expert statements and document on April 25 and will submit the Chinese translation version of the SOC and related documents on June 5, 2017.
In the meantime, the field production rate has been maintained at the normal design level of circa 25 mmcfpd and the payment process has been normalized and maintained.