It came as no surprise on Friday when Petrotrin announced that they had terminated the lucrative oil contract with AV Oil and Gas Limited.
The decision of the Board of Directors came after three audits showed serious discrepancies where oil was not submitted to Petrotrin by AV Oil, although that company was paid some $80 million.
But a legal battle is looming as AV Oil is going after a billion dollars in damages.
Ramesh Lawrence Maharaj SC, attorney for AV Oil, has written to Petrotrin demanding a response by January 2, 2018.
He added, “If none is forthcoming, we have the option to go to court for an injunction to block their termination decision. A breach of contract can result in Petrotrin paying over $1 billion in damages”
An August Petrotrin audit report had alleged volume discrepancies occurred between oil production and actual receipts. An employee and lease operator fell under scrutiny, after it was alleged the state-owned company overpaid $80 million for oil which wasn’t supplied.
Petrotrin’s board subsequently commissioned external forensic audits by Kroll Consulting of Canada and global oil and gas consultants Gaffney Cline, which confirmed the internal findings.
Petrotrin’s board announced that the company has given notice of the termination of contract to the lease operator “associated with the discrepancies in reported oil production and actual receipts” revealed by its Internal Audit Department. Petrotrin noted its Audit Department’s findings were confirmed by Kroll Consulting.
The statement added, “Another report, from global oil and gas consultants Gaffney Cline, had also advised that the reservoir from which the oil had been produced was incapable of yielding the reported volumes. Petrotrin gave written notice of termination to the lease operator this week after it communicated its findings to the operator and gave it an opportunity to respond.”
“Adherence to process is the most important component of this exercise. We’re being guided by expert counsel, and are committed to ensuring that we do things in accordance with proper procedure.”
Maharaj added, “They have no legal or factual basis for termination of the contract, as they haven’t produced any evidence to show A&V was involved in any wrong-doing in the supply of oil. They’ve also breached the contract by not acting in good faith, since they have refused to give us a copy of the Kroll and Gaffney Cline reports on which they based their decision.”
Maharaj said his company had now triggered the dispute resolution mechanism which requires Petrotrin to meet him to further discuss the matter on January 2 at Petrotrin headquarters.
The former AG declared, “We indicated to them all of this is without prejudice to our right to contend and we’re entitled to get an injunction from the High Court against them to restrain them from acting on their decision to terminate the contract.”
“We indicated their decision is in violation of good faith and natural justice and we asked them – under the contract – to comply with the requirements of conciliation and mediation. If they don’t, we’re entitled to go to court to compel them to obey under the terms of the contract.”
Maharaj said his client is also demanding the money which Petrotrin owes A&V for supply of oil from August – when the audit report was done – to date.
“That is to the tune of $70 million. A breach of contract can a result in Petrotrin paying over $1 billion in damages because the investment of our client was almost $1 billion.”
Oropouche East MP, Dr Roodal Moonilal, believes Petrotrin now has to explain why it has failed to make a report of the discrepancy to the Police Service and Fraud Squad, given that three audits had revealed troubling findings and why it took so long for the company to act.
Moonilal added, “I am sceptical as to the turn of events that led to such belated termination of contract. Petrotrin, by delaying action, may be undermining a criminal investigation.”
Moonilal said the “Attorney General should acquire all documents relevant to the matter so they can act with equal urgency as they did with HDC and EMBDC.”
He also called on Prime Minister Dr Keith Rowley to recuse himself on any decisions related to the scandal.
RAMESH LAWRENCE MAHARAJ SC
DR ROODAL MOONILAL