Victoria Oil and Gas has been forced to suspend trading after a tribunal ruled against in relation to a dispute brought by a partner in Cameroon.
The International Chamber of Commerce (ICC) made a partial final award for $12.1 million plus interest against Victoria’s local unit, Gaz du Cameroun (GDC). A question around costs and fees for lawyers remains open, with the aim of reaching an agreement by June 30.
RSM Production had taken GDC to arbitration in October 2018.
The tribunal found Victoria had wrongfully included royalty payments as a recoverable cost. This moved the payout date. As a result, this tribunal found the shift cost RSM $10.6mn plus interest – the lion’s share of the total award.
Victoria cannot appeal the award and it must pay the cash without delay. Neither GDC nor Victoria has the ability to pay the award. Victoria had $1.6mn as of the end of June 2021.
RSM and Victoria are working on a “constructive dialogue” on a deal – although the company warned against assuming success. The parties will meet face to face on how to “prospectively maximise the joint venture’s value proposition long-term”.
Victoria’s non-executive chairman Roger Kennedy joined after the payout calculations had been made. Kennedy said the company must deal with the consequences.
The current management “inherited this 2018 arbitration and they have been working flat out to deal head-on and decisively with all the issues they had inherited, and they had also found time to cultivate a hopper of exciting business development opportunities”, Kennedy said.
However, the chairman did say the company has made “huge strides” in improving its relationship with RSM. “The board thus has confidence in the management to navigate through this legacy issue and return the company to a healthier footing.”
In the meantime, Victoria and GDC will continue producing gas and condensate in Cameroon.
Legendary oilman Jack Grynberg set up RSM. Cameroon awarded Logbaba to RSM in 2001, with the company bringing in Victoria in 2006. The relationship was marked by a number of court disputes – as was much of Grynberg’s life. He died in October 2021.