Geoglobal hits back in angry $190m row with GSPC
Canadian explorer Geoglobal Resources shows no sign of backing down in a fight with partner GSPC over past exploration costs at discovery block KG-OSN-2001/3.
“GSPC has no right to seek the payment,†declares GGR in its quarterly submission to the US Securities and Exchange Commission on August 10. “Geoglobal believes the payment GSPC is seeking is in breach of the Carried Interest Agreement.
†Geoglobal is fighting claims that it owes GSPC $78m, equivalent to 10% of all exploration costs till September 30 last year, the end of the Minimum Work Programme. After interest payments, says Geoglobal, the sum GSPC is claiming has risen to $115m.
Geoglobal claims that under the Carried Interest Agreement signed by the two companies on August 7, 2003, the Canadian company, “shall be â€کcarried’ by GSPC for 100% of its entire share of any costs during the exploration phase prior to the start of commercial production.†Geoglobal stresses that senior Indian legal counsel endorses its position.
But no one at GSPC is listening. Several attempts by Geoglobal to fix meetings in July this year to resolve the issue came to nothing while the amount GSPC claims from Geoglobal in exploration costs continues to soar.
Last November GSPC served Geoglobal an ultimatum, saying it would be embarking on a fresh exploration programme concluding on September 30 this year and that if Geoglobal wanted to be counted as a partner it would have to pay $75m, equivalent to 10% of $750m additional exploration cost. Geoglobal responded that it would participate, but only under the terms of the Carried Interest Agreement, that is, with all exploration costs â€کcarried’.
Geoglobal tells the SEC that talks have been going on for two years but that “as at August 5, 2009 no agreement has been reached.†Should the matter go to arbitration, Geoglobal promises to “vigorously protect its contractual rights in accordance with the dispute resolution process in the Carried Interest Agreement.
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