Primeline Energy Holdings has announced that it has just received notice that China Oilfield Services Limited (COSL) has commenced arbitration proceedings against the company’s subsidiary Primeline Energy Operations International (PEOIL) at China International Economic and Trade Commission (CIETAC) regarding a payment dispute under a turnkey drilling contract in 2015.
The amount claimed by COSL in the arbitration against PEOIL is RMB119m ($17.8m).
Primeline said that the dispute with COSL is part of the overall operational and commercial issues the company has encountered in the last 2 years with Primeline’s other subsidiaries, suffering from the default of Zhejiang Natural Gas Development Company (Zhejiang Gas) and the related dispute with China National Offshore Oil Corporation (CNOOC).
Primeline entered into arbitrations with Zhejiang Gas and CNOOC separately in 2016 and is claiming RMB435m ($65m) from Zhejiang Gas.
Primeline said the breach of contract by Zhejiang Gas has led to significantly lower than anticipated cash flow and presented difficulties in relation to the ability of its subsidiaries to service their obligations under the project finance loan for the development costs of the LS36-1 gas field. It is unable to make payment of COSL’s costs under the drilling contract without prior resolution of the disputes with Zhejiang Gas and CNOOC.
