Chevron resumes arbitration in Thai gas dispute

[snoop1130]

Chevron resumes arbitration in Thai gas dispute

By Patpicha Tanakasempipat

 

FILE PHOTO: The logo of Chevron Corp is seen in its booth at Gastech, the world's biggest expo for the gas industry, in Chiba, Japan April 4, 2017. REUTERS/Toru Hanai

 

BANGKOK (Reuters) - U.S. energy major Chevron Corp has resumed arbitration proceedings with Thailand to try to resolve a dispute over who should pay for removing offshore assets in the country's Erawan gas field, the company told Reuters on Friday.

 

The move comes a year after the company suspended the legal process to allow more time for talks with Thailand's energy ministry, ahead of the end of its concession in April 2022.

 

"For the last 12 months we have been seeking a solution on this issue ... in order to reach agreement that protects our rights as an investor," a company spokesman told Reuters.

 

"With no such solution likely in the near term, we are regretfully compelled to reinstate arbitration."

 

Thailand's energy ministry was not immediately available for comment, but has said it would be ready to enter arbitration if needed.

 

The dispute resulted from a retroactive Thai law in 2016 requiring gas field operators to pay the costs of decommissioning assets they have installed, including those they will transfer free of charge to a next operator.

 

Last year, Thailand asked Chevron to pay the full decommissioning costs of around $2 billion for assets in the Erawan gas field, including those it will hand over to PTT Exploration and Production Pcl, a unit of the state-owned PTT Pcl.

 

Chevron argues that, under the terms of its initial contracts from 1971, it is only liable for infrastructure that is no longer deemed usable and the transferred assets are the responsibility of the new operator.

 

The decommissioning work of the unusable assets was already underway, Chevron said on Friday.

 

Reuters reported in September 2019 that Chevron had suspended the arbitration process to continue talks with then-energy minister Sontirat Sontijirawong, who resigned in July.

 

The new energy minister, Supattanapong Punmeechaow, formerly a vice president of PTT, met with Chevron's representatives last month but has not made public comments about the dispute.

 

The case has implications for France's Total SA and Japan's Mitsui & Co, which also have stakes in soon-expiring offshore energy concessions in the Gulf of Thailand.

 

Foreign investors in Thailand beyond the energy sector have followed the dispute closely due to concerns about the retroactive use of laws and the precedent the case might set.

 

-- © Copyright Reuters 2020-10-02

 

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[holy cow cm]

I have no side. Just always ugly from each entity involved in this mega business.

[Mr Meeseeks]

Chevron are packing up and pretty much leaving Thailand altogether by 2022.

 

I will be following this case with keen interest as I have business interests with both the Thai Govt. and Chevron.

 

 

[ChrisY1]

"gas field operators to pay the costs of decommissioning assets they have installed, including those they will transfer free of charge to a next operator."

Any wonder Chevron are harped up.....as would any company required to hand over, FOC, assets they paid for...not the best way to attract major companies to invest in Thailand....very Chinese-ish!

[anterian]

Thailand seems very fond of passing retroactive laws. 

[Srikcir]

This Thai government seems to gave great difficulty conforming to arbitration provisions similarly found in its FTA's.

Having had free rein over enterprises for years as a military junta armed with absolute power, it seems almost incapable to transition as an elected government to binding contractual provisions. The result is that it consistently costs the Thai taxpayers unnecessary penalties to sustain inappropriate contractural positions - for what, Pride? It needs to focus on what the Nation needs and not what their egos need.

[Redline]

Bad business, and along with what will likely be a major loss in the Kingsgate debacle, it is very likely Chevron will also win its case costing the Thai government substantial losses in a very bad moment in time.  Belts are tightening, and pressure on companies to shore up their balance sheets will pressure outcomes for both these case in the next year.

 

Quote from The Nation article regaurding Kingsgate :

 

There must also be full disclosure of documents and other evidence to support the action.

 

However, the Article 44 order appears to have not followed the procedures established in the bilateral agreement. In addition, the reasons provided by the NCPO for the closure were brief and, according to Decharut, there were insufficient scientific and academic documents to substantiate the order.

Decharut said there is much scientific and academic evidence on this matter, but the dearth of its inclusion as direct support for the special NCPO order could become a factor leading to a legal defeat in the arbitration proceedings.

Edited October 3, 2020 by Redline

[IAMHERE]

Probably someone should of told Chevron not to bring money into Thailand that they aren't willing to just walk away from. Not just farang but farang companies may need to take heed.