Frontier appoints arbitrator on alleged breach of Palawan deal


PETALING JAYA: The Philippines-based oil and gas group Frontier Oil Corp said the Singapore International Arbitration Council has appointed an arbitrator to manage the dispute process on alleged breach of US$20 million (RM76.20 million) drilling contract in north-west Palawan in the Philippines.

On April 10, UMW Oil & Gas Corp Bhd (UMW-OG), the oilfield and drilling services provider stated in its filing with Bursa Malaysia that the group has filed a lawsuit against Frontier, seeking compensation for the alleged breach of contract.

UMW-OG said the group is seeking an award for damages and/or compensation for all losses arising from Frontier’s breach of contract, but not limited to the early termination fee amounting to US$19.2 million.

“Frontier has a robust defence against the claim and takes the view that UMW had no basis to terminate the drilling contract. As a consequence of UMW’s unlawful termination of the drilling contract, Frontier has suffered significant losses, which will be determined in the arbitration,” Frontier said in a statement yesterday.

“Frontier will provide further details as and when it is permitted to do so without interfering with the due process of the law,” it added, noting it will continue to work with its legal advisors Squire Patton Boggs on the conduct of the arbitration.

Initially, both parties signed a drilling contract in September 2014, with UMW-OG to provide a drilling unit, UMW Naga 7, and other related services to drill, deepen, side-track, work-over, re-enter, tieback, and any other such operations on a well.

The services will be rendered by UMW-OG until the completion of each well as a producing well or have each well suspended, plugged, and/or abandoned.

In return for these services, Frontier was to arrange the issuance of a bank guarantee of US$5 million and an advance payment of US$15 million before the deadline on Dec 15, 2014.

However, Frontier did not arrange for the bank guarantee and the advance payment.

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