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Talisman battles CNOOC over Tangguh



By Upstream staff 

Talisman Energy is suing China National Offshore Oil Corporation’s (CNOOC) listed arm CNOOC Ltd over a stake in a $5 billion liquefied natural gas venture in Indonesia, US court papers show.

Talisman's Fortuna Resources unit is claiming the right to 44% of CNOOC Ltd’s 17% interest in the Tangguh development, the Calgary Herald reported.

However, CNOOC Ltd claims in its filings that Fortuna does not have the right to share in the project, and if the court agrees, Fortuna's interest would be no more than 5.4%.

Tangguh, led by BP, will expand China's LNG supplies by 75%.

The Tangguh project is scheduled to begin in 2008 as planned, regardless of the suit, according to BP, which holds a 37.2% stake in the venture.

CNOOC Ltd’s parent has a 25-year agreement to buy 2.6 million tonnes of LNG from Tangguh, which will initially have a capacity of 7.6 million metric tonnes a year.

The dispute originates from 1968 when Warrior International entered into an agreement with Independent Indonesian American Petroleum and Carver Dodge International., the court document said.

Warrior International merged in 1984 with Warrior Oil, which was acquired by Paladin Resources in 1999.

In 2005, Paladin Resources was bought by Talisman for $2.5 billion. Paladin Resources then changed its name to Fortuna Resources.

A section of the original agreement contains an "area of mutual interest clause," Fortuna's complaint said.

The clause provides that if a partner acquires any exploration interests in Indonesia, "it must offer the other parties" a participating share.

Independent Indonesian American Petroleum's interest in the agreement was acquired by Spain's Repsol, according to the document.

In January 2002, CNOOC Ltd paid $585 million to Repsol for oil and gas fields in Indonesia.

Talisman's unit claims it has rights and CNOOC Ltd has obligations that have survived the corporate mergers and transfers of the parties' interests since the original contract was signed.


Wednesday, 13 June, 2007, 01:34 GMT  | last updated: Wednesday, 13 June, 2007, 02:02 GMT

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