A&V tells Petrotrin let’s talk or...We’ll sue for $1B

Let’s mediate or face a $1 billion lawsuit.

These are the options A&V Oil & Gas Ltd has put before Petrotrin which on Friday announced it had terminated the contract of the lease operator accused of billing the State company for oil it never supplied.

In a letter to Petrotrin, Ramesh Lawrence Maharaj SC, attorney for A&V, whose owner Nizam Baksh is a friend of Prime Minister Dr Keith Rowley, also cautioned against any move to take over A&V’s Catshill Field in Moruga. He has asked Petrotrin to hold its hand on cancelling the contract and enter into mediation on January 2. If not, A&V will seek a High Court injunction to bar Petrotrin from carrying out its decision. A&V will also consider a lawsuit for $1 billion which it claims Petrotrin owes for withholding payments for oil supplies.

Maharaj, in his letter to Petrotrin’s vice president (exploration/production) Stephen Awah, outlined a number of discrepancies in how Petrotrin arrived at its decision to terminate A&V’s contract based on the findings of Kroll Consulting Canada Co and Gaffney, Cline & Associates of the United Kingdom.

Petrotrin hired Kroll to conduct a forensic audit based on a report done by its internal audit department on its exploration and production operations for January to July. The audit department found the lease operator had overstated its production capacity and supplies which Petrotrin paid an estimated US$8 million for. Kroll confirmed the Petrotrin audit report, which Gaffney Cline also corroborated stating that the Catshill reservoir was not capable of producing the volumes stated by A&V.

Opposition Leader Kamla Persad-Bissessar first disclosed the Petrotrin report in November dubbing it the “fake oil” scandal.

On Friday, Petrotrin chairman Wilfred Espinet said A&V’s contract had been terminated, although the company was not named in the statement. Petrotrin had informed A&V about the decision before issuing the release, which said reasonable grounds existed to suspect the Penal-base lease operator of misconduct

Maharaj contended A&V was not provided with a copy of the internal audit report which alleged A&V’s recorded increased production from 70,222 barrels in March to 126,784, the following month, should have raised a red flag by its exploration department.

Petrotrin alleged collusion by some of its own employees to overstate A&V’s crude oil production from the Catshill field. Petrotrin employee Vidya Deokiesingh, the PNM candidate in the 2015 general election, had been identified in the report and under disciplinary proceedings although he continues to work in a different department. Co-workers recently protested against his return from leave recently and had to be escorted by Petrotrin police.

Maharaj wrote that A&V was gravely prejudiced when Petrotrin refused to provide copies of the Kroll and Gaffney Cline reports.

He said A&V did not have an opportunity to provide Petrotrin with its own audit. Petrotrin instead asked A&V to respond to “broad allegations of misconduct”. A&V asked for the specific allegations of misconduct as well as evidence and data, but Maharaj stated, none was forthcoming.

Stating that clause 36.2 of the A&V contract provides that parties resolve disputes in good faith, Maharaj accused Petrotrin of treating the Kroll and Cline reports as privileged and confidential. He said even if an A&V employee or contractor was guilty of any misconduct, A&V’s management was not a party to such an action to overstate its’ oil production.

Maharaj stated Petrotrin continued to accept oil from A&V but, as of November 30, it withheld $78,641,133.30 on the allegation that the lease operator overstated its production.

Maharaj has asked for an arbitration meeting on January 2, to be moderated by Reginald Armour SC and dispute resolution experts arbitrator John Dowse and Helen Alves. He advised Petrotrin to name its nominees. If Petrotrin did not agree, A&V will initiate legal action.