Orca Energy's Legal Battle Over Tanzania Gas Development Project
Orca Energy Group Inc. Engages in Arbitration Proceedings
Orca Energy Group Inc. (TSX-V: ORC.A, ORC.B), an international company specializing in natural gas development, recently announced significant legal actions against the United Republic of Tanzania and the Tanzania Petroleum Development Corporation. This move underscores ongoing challenges surrounding the viability of the US$1.2 billion Songo Songo Gas-to-Electricity Project.
Details of the Arbitration Initiatives
The Company’s subsidiary, Pan African Energy Corporation (Mauritius), initiated a Request for Arbitration at the International Centre for Settlement of Investment Disputes (ICSID) due to alleged breaches of the Agreement on Promotion and Reciprocal Protection of Investment. Similarly, another subsidiary, PanAfrican Energy Tanzania Limited (Jersey), has presented two separate Requests for Arbitration against the Tanzanian government and TPDC for violations related to key agreements governing the project.
Claims Arising from Government Actions
The claims stem from multiple infringements by Tanzania and TPDC that jeopardize not only the Project's future but also violate several obligations outlined in existing agreements. Key allegations include delays and unilateral actions surrounding the extension of the Development Licence, which is vital for the project's continuity.
Significant Breaches Highlighted
- Delayed Extension of the Development Licence: The subsidiary PAET sought an extension of its Licence in 2023, yet TPDC did not process this request in a timely manner. Despite contractual obligations, TPDC’s actions have threatened the economic feasibility of the Project.
- Imposition of the Protected Gas Regime: Following the expiration of the Protected Gas period, various interventions by TPDC have introduced new dynamics that undermine commercial agreements, all under governmental direction.
- Failure to Honor Royalty Payments: TPDC’s neglect in fulfilling its royalty obligations has compelled PAET to face financial pressures counter to the agreements they had laid out.
- Regulatory Pressures: Persistent harassment through regulatory and administrative channels has further strained the operational environment for PAET.
Efforts Made Prior to Arbitration
Prior to escalating matters, PAEM and PAET had engaged in thorough negotiations, issuing a Notice of Dispute. However, no substantial progress was made, leading to the decision to move forward with arbitration. The lack of meaningful dialogue has resulted in a lack of options for the Company.
Company Valuation and Future Steps
Currently, Orca Energy values the Songo Songo Project at approximately US$1.2 billion. They are set to engage experts to assess the damages and will keep stakeholders updated as proceedings unfold. This arbitration is essential not only for the Company but for maintaining a stable energy supply in the region.
Remarks from Leadership
CEO Jay Lyons expressed disappointment about the need to pursue these legal actions after two decades of partnership with the Tanzanian government. He emphasized the Company’s desire to continue operations and bolster opportunities for stakeholders while seeking amicable solutions.
About Orca Energy Group Inc.
Orca Energy Group Inc. plays a crucial role in natural gas development in Tanzania through its subsidiary, PAET. With its strong track record both in operations and strategic engagements within the region, Orca continues to aim for sustainable growth while tackling complex legal environments.
Frequently Asked Questions
What is the current status of Orca Energy's arbitration?
Orca Energy is currently engaged in arbitration proceedings against Tanzania and TPDC regarding breaches of investment agreements impacting their gas-to-electricity project.
What are the main claims made by Orca Energy?
Orca claims include failure to extend the Development Licence, imposition of unfavorable regulations, non-payment of royalties, and ongoing harassment from state agencies.
How much is Orca Energy seeking in damages?
While the specific amount will be assessed during arbitration, the Songo Songo Project is currently valued at approximately US$1.2 billion.
What efforts did Orca make prior to arbitration?
Orca made extensive efforts to negotiate with Tanzanian authorities, including issuing a Notice of Dispute, but ultimately saw no progress and chose arbitration as a necessary next step.
Who is representing Orca Energy in this arbitration?
Orca is represented by Boies Schiller Flexner LLP, a law firm known for expertise in international arbitration.
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