By Omar Bah
PetroNor E&P Ltd has finally received a petroleum exploration development and production license from Gambia after an out-of-court agreement to settle a legacy dispute.
The Ministry of Energy said the signing of the Settlement Agreement and the A4 Licence is a historic day for the petroleum sector as it brings to an end three years of arbitration proceedings brought by African Petroleum against the Gambia before an international tribunal.
“It was a very contentious legal matter and threatened the Government’s control over certain offshore oil exploration Blocks. We are pleased to have reached a mutually beneficial settlement and the positive implication is lifting the cloud of uncertainty that has hung over the process as a result of the Arbitration,” the ministry said.
The Gambia issued two licences to Africa Petroleum Gambia Limited (APGL) to conduct petroleum operations with respect to two offshore blocks, namely, the Block A1 and the adjacent Block A4 on 8 September with initial 60% of the participating interests by way of assignment in 2010 and then obtaining the remaining in 2014.
African Petroleum was supposed to drill an exploration well during the initial exploration period on or before 1 September 2016. However, no well was drilled within that deadline and the Licences expired on that date which prompted the Gambia government to demand renegotiation of the licences.
Unhappy with the government decision, African Petroleum, in 2017, launched arbitration proceedings against Gambia over the government’s decision to strip it of its rights to explore for oil in two offshore areas.
However, the Gambia had argued that African Petroleum’s licences had expired and were now open for relicensing, accusing the company of failing to meet its commitments – charges African Petroleum denies.
The Minister of Petroleum, Fafa Sanyang said the government is delighted to have ended the three years of arbitration proceedings to finally issue PetroNor licences.
“I am pleased to announce that the settlement of this arbitration brings an end to all the Petroleum License disputes involving The Gambia,” he said at the signing ceremony.
Minister Sanyang added: “After three years of intensive legal battles, settlement discussions commenced last year with PetroNor, an Oslo Axess stock market listed oil and gas exploration company, which took over ownership of African Petroleum. While maintaining a strong defense, we continued to negotiate in good faith, which culminated in the agreement reached today to terminate the arbitration and resolve all the legal disputes between the parties.
One of the oil blocks in question, A1, was licensed to British Petroleum (BP) in 2019, and through this resolution, PetroNor will have the opportunity to acquire the license to the remaining Block, A4, on agreed commercial terms with the government.”
The development came a year after the government stabilised and reinstated the new A2 and A5 licence to FAR Energy and petronas.