AV Oil, Petrotrin arbitration ruling laid in Parliament

ENERGY Minister Stuart Young told the House of Representatives on Friday that his laying of the 76-page report on the arbitration ruling between Petrotrin and AV Oil in the "fake oil" scandal would put the facts on the public record, in the public interest.

"This hopefully brings to an end the mischief, misinformation and attempts to mislead the people of Trinidad and Tobago after almost four years.

"The laying of the award/decision of the tribunal in the House today allows the public to read for themselves every line of the findings of the panel of arbitrators; to see, first hand, the detailed manner in which these three judges found what they did."

Young said soon after Opposition Leader Kamla Persad-Bissessar had publicly raised the matter in 2017, by reading a draft, interim internal audit report, Petrotrin had abruptly ended its contract with AV Oil to explore and extract oil from the Catshill Field.

However, AV Oil won its case at an arbitration adjudged by Sir Denis Byron, Lord David Hope and Humphrey Stollmeyer in a unanimous ruling last June.

Young said, "The judges found, inter alia (among other things), that Petrotrin failed to establish, and did not have any reasonable grounds for suspecting, that AV was engaged in misconduct, fraudulent or inappropriate activity, as alleged." Petrotrin must treat crude oil delivered to it by AV from April 2016 to June 2017 as delivered.

"In other words there was no evidence that AV was paid for 'fake oil.'

"Petrotrin was not entitled to terminate the IPSC (incremental production service contract) and AV is entitled to damages for wrongful termination of the IPSC."

Young said the tribunal ordered that AV was entitled to payments of $84.7 million and $17.3 million for unpaid invoices for the delivery of crude oil to Petrotrin plus interest.

He added that the issues of damages and compensation to AV, whether Petrotrin could counter-claim, and the costs of the arbitration would be dealt with at a further hearing.

Young said the judges found the Catshill Field was capable of producing the quantities of oil which AV said it had sold to Petrotrin and the pump rates relied on by AV Oil were possible.

He said the tribunal found no evidence of AV siphoning any oil to be sold to Petrotrin.

"The experienced panel of three distinguished judges decided, unanimously, that there was no fake oil issue."

On post-arbitration, Young said, "Appeals on findings of facts, especially, of arbitrations are very rarely successful or overturned."

He said out of three senior/queen counsel consulted by Petrotrin, two counsel (Rolston Nelson and Simon Hughes) had advised against appealing the arbitration decision, as an appeal would fail.

Young said, "AV’s claim for losses and damages was approximately $966 million. The parties engaged in negotiation, and eventually agreed to terms of settlement that Petrotrin would pay the sum of $18 million to AV, in settlement of all and any damages suffered in connection with the termination of the IPSC, and that Heritage Petroleum Company Limited, Petrotrin’s subsidiary, would grant AV a new 10-year enhanced production services contract for oil exploration and production in Catshill."

He said the only outstanding issue to resolve was the issue of costs to be paid to AV by Petrotrin.

"Instead of having to find cash to pay $996 million in cash, Petrotrin was able to persuade AV to accept access to the Catshill Field for the purpose of resumption of AV drilling activities in the expectation that this venture would be successful, providing future benefits to AV and Heritage, one a seller of oil and the other a buyer of the said oil produced by AV."