Chinese state-owned companies sue Talisman Energy for $5.5 billionUSD

“Addax has chosen to commence legal proceedings to gain an illegitimate benefit instead of devoting all efforts to improving TSEUK’s performance”

TalismanAddax Petroleum UK Limited and Sinopec International Petroleum Exploration and Production Corporation (both companies ultimately owned by the Chinese Government) have initiated arbitration proceedings against Talisman Energy Inc. (currently Repsol Oil & Gas Canada Inc.) and Talisman Colombia Holdco Limited.

Talisman and Repsol say the claim “baseless” and is currently assessed by the companies, as well as by their external legal counsel, as “remote risk.”

Addax and Sinopec seek repayment of their initial investment in TSEUK, which was executed in 2012 through the purchase of 49 per cent of TSEUK from the Canadian group Talisman.

Together with any additional investment, past or future, in such company, and further for any loss of opportunity, and which they estimate at $5.5 billionUSD.

Addax intends to maintain its current stake in TSEUK.

“The claimants’ proceedings can be interpreted as a defensive action undertaken by those who adopted an investment decision in the United Kingdom which has not delivered the results expected by them -as it has also happened with other investments by this group of companies,” Talisman said in a press release.

“Talisman believes the arbitration claim groundless and inconsistent with the loyalty to be expected from a business partner.”

The claims have commenced almost three years after Addax acquired a stake in TSEUK, even though Addax has participated at a management level and in all decisions adopted by TSEUK since then, without expressing any worries or concerns, according to Talisman.

“Addax has chosen to commence legal proceedings trying to gain an illegitimate benefit instead of devoting all efforts to improving TSEUK’s performance since Repsol’s entry into the joint venture-, something that might explain its desire to remain as a shareholder in TSEUK,” said the release.

Talisman and Repsol say they hope Addax will stop the action and “devote all efforts to the best management of their affiliates in Brazil and the United Kingdom.”

Posted in: Energy Financial

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