Primeline Energy has announced that the company insolvent due to inability to repay debts and damages related to a joint exploration contract with China National Offshore Oil Corporation (CNOOC).
Primeline Energy and CNOOC entered into an arbitration process in 2016 for disputes under a jointly development contract for the LS 36-1 gas field project in China in which Primeline Energy and CNOOC hold 49% and 51% interest respectively.
The arbitration tribunal upheld claims made CNOOC for $30m owed by Primeline under the development contract.
According to Primeline, it is in default under its credit facility with the syndicate of banks that provided finance for its portion of the gas field project and it is unable to pay the award of damages to CNOOC and fully service the debt because of significantly reduced cash flow from the project, and the company is therefore now insolvent.
Primeline said it will meet with the banks shortly to determine how to proceed with the debt issue.
Primeline is an exploration and production company focusing exclusively on China natural resources under petroleum contracts with CNOOC in the East China Sea. The LS36-1 Gas Field has been in production since July 2014.