Genel Energy PLC (LSE: GENL) announced on Monday that it has lost an arbitration case to the Kurdistan Regional Government (KRG) regarding the termination of its production sharing contracts (PSCs) for the Bina Bawi and Miran oilfields.
The London Court of International Arbitration ruled in favor of the KRG, affirming its right to terminate the agreements.
The dispute originated in December 2021 when the KRG moved to end the contracts held by Genel’s subsidiary, Genel Energy Miran Bina Bawi Limited (GEMBBL). Genel initially challenged the termination, claiming it was the result of repudiatory breaches by the KRG and filed a counterclaim seeking damages for the loss of development rights over the fields.
The Tribunal dismissed GEMBBL’s counterclaim and deferred its decision on the allocation of arbitration costs to a later ruling. Genel’s Chairman, David McManus, expressed disappointment with the decision, promising a detailed market update once the company completes its analysis of the arbitration award.
The outcome has significant implications for Genel, as the Bina Bawi and Miran fields were considered critical assets in its portfolio. Losing these contracts could compel the company to reassess its operations in the Kurdistan region and adjust its broader strategic plans.
This decision highlights the complexities and risks involved in international oil and gas agreements, especially in politically sensitive regions. While the final arbitration costs are yet to be determined, Genel’s acknowledgment of the verdict signals its commitment to legal due process and transparency.
Industry observers and investors now await Genel’s next steps as it navigates this pivotal moment in its business trajectory.
