Crescent Petroleum and Dana Gas have sold their shares in Hungarian oil and gas company MOL, their partner in the Pearl consortium operating in the Kurdistan Region of Iraq, and started arbitration proceedings over a recent settlement with the Kurdistan Regional Government (KRG), disputing the validity of a default notice MOL has served.
The KRG agreed last month to immediately pay USD 1 billion to the Pearl consortium that includes Crescent and Dana Gas, after four years of legal battles, according to reports.
“The settlement agreement with the KRG was welcomed and endorsed by Dana Gas, Crescent Petroleum, OMV and RWE, together holding 90% of the shares of Pearl,” Dana Gas said in a disclosure on the website of the Abu Dhabi Securities Exchange on Wednesday.
“Unfortunately, MOL unreasonably sought to link its endorsement of the settlement to a renegotiation of the terms by which it first secured its participation in Pearl back in May 2009, and now complains about Dana Gas and Crescent Petroleum for their handling of the settlement alongside Pearl, expressing dissatisfaction with the outcome as compared to the alternative of pursuing a final litigation and enforcement outcome against the KRG,” Dana Gas added in its filing.
MOL served a default notice on Dana Gas and Crescent Petroleum on September 11, 2017, after the companies entered into the agreement to settle Pearlʼs long-standing dispute with the KRG without - it argued - properly consulting MOL or obtaining requisite approval, in breach of MOLʼs contractual rights.
“The default notice has severe legal consequences for the defaulting shareholders, their shareholdings in Pearl and their related entitlements,” MOL said in the disclosure published on the website of the Budapest Stock Exchange.
Dana Gas said it has commenced arbitration proceedings against MOL in the London Court of International Arbitration.
Dana Gas and Crescent Petroleum have now sold the entirety of their combined 6% shareholding in MOL.