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Thursday, October 2, 2014
Vanoil Ltd. and the government of Kenya will be heading to court as Vanoil launched international arbitration against the Kenyan government over its PSCs for Blocks 3A and 3B. Vanoil says the terms of the PSCs have been breached.
The Canadian oil firm launched its drilling operations at the Madogashe-I drill site (Block 3A) in Kenya prior to July 31, 2013, as part of its commitment specified in the amended PSCs for Blocks 3A and 3B. The company was unable to drill, however, because drill site operations were significantly impaired by a number of incidents of local disturbance and unrest. Vanoil was directed by local government authorities to reduce and then delay operations until a safe return to the site could be provided.
The company’s decision to proceed with a formal arbitration demand follows prolonged discussions with government officials regarding an extension of the PSCs for Blocks 3A and 3B in order to accommodate the lengthy delays experienced at the drill site and give the government of Kenya sufficient time to provide Vanoil with secure and safe access to its site, in order to complete its two-well program.
Vanoil is seeking not less than $150 million as full and proper restitution for its seven years of exploration and development, based upon the net present value of its investment in Kenya, to which it is entitled under the PSCs.
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