The Government and Petrotrin have scored a “historic” and “amazing legal victory” over energy company World GTL which had brought a $1.8 billion claim against the State-owned oil company.
That arbitration had two legs—one based in Toronto, the other in London—and the risk exposure to Petrotrin was so great that it ran to over $1.8 billion, the Attorney General Anand Ramlogan stated. “It could have crippled and bankrupt our national oil company...with dire implications for our economy...had the claim against Petrotrin succeeded, since it would have entailed payment of damages of US$228 million plus interest and costs,” the Attorney General noted.
But he said WGTL’s claim was dismissed and legal costs amounting to approximately $24.3 million were awarded in Petrotrin’s favour.
Ramlogan stated, however, that he would now have to do an international means and assets search to see if he could recover one red cent for WGTL, which went into receivership in 2011.
In making the announcement in the House of Representatives yesterday, Ramlogan stated: “Today I am pleased to announce that on 24th April, 2014, Petrotrin won a very significant victory in arbitration proceedings brought before the London Court of International Arbitration by World GTL Inc. and World GTL St Lucia Ltd”.
“The victory represents yet another legal milestone achievement for the leadership and Government of the People’s Partnershi which inherited a series of complex legal disputes spawned by the mismanagement of the PNM. Coming on the heels of the recent victory in the settlement of the OPV arbitration, this judgment against highlights the Government’s committement to unravelling the messy avalanche of complicated legal disputes which the actions of the previous administration prompted,” Ramlogan stated.
Petrotrin was represented by British Queen’s Counsel Alan Newman, together with New York attorneys Louis Kimmelman and Erin Thomas.
Ramlogan said the failed joint venture gas-to-liquids venture had been an unmitigated disaster for Petrotrin. He said the project was initially funded by US$125 million project loan from Credit Suisse, cash equity contributions of US$10 million from Petrotrin and the issuance of US$30 million non-voting preference shares. And he said it was agreed that all cost overruns would be borne in proportion of the sharing of the parties- which was 49 per cent/51 per cent. “Incredibly, inexplicably and disastrously, that never happened.”
“To date Petrotrin funded every red cent of those cost overruns because WGTL did not appear to have any money,” he said. Petrotrin funded cost overruns to the tune of US$190.4 million. “In the end, the actual construction cost to date of this unfinished plant is US$400 million compared with an initial project cost in 2007 of US$160 million,” he said.
The project began when the Malcolm Jones-led board of Petrotrin entered into an agreement to jointly develop a gas to liquids (GTL) project with World GTL in September 2005. WGTL filed a claim against Petrotrin in December 2011 wherein it sought damages for alleged breaches of fiduciary duty, based on statements and representations made by the former Petrotrin Jones-led board.
Ramlogan said had there been even elementary due diligence on the part of the board and in particular by Malcolm Jones, the then executive chairman, WGTL’s lack of funds and lack of licence for the catalyst would have been discovered, the project against would never have been signed in the first place and the loan repayment as well as the 33 cost overrun contributions paid by Petrotrin to Credit Suisse would not have occurred.