Romania: Sterling takes force majeure offshore

By OGJ editors
HOUSTON, Apr. 28
– Sterling Resources Ltd., Calgary, declared force majeure on its Midia and Pelican blocks in the Black Sea on its inability to obtain permits from Romanian authorities.

In early 2011, after extensive and lengthy efforts, Sterling obtained the environmental and drilling permits necessary for operations on the blocks. The National Agency of Mineral Resources approved a 2011 work program that obligates Sterling to drill two wells, shoot 1,050 line km of 2D seismic, and undertake studies to bring the Ana and Doina gas discoveries to development.

However, in July 2009 the Romanian parliament passed a law requiring construction permits for certain offshore activities. Sterling has sought clarification of this requirement from relevant authorities, as the activities contemplated under the 2011 work program clearly appear to have aspects that will require a construction permit.

It is Sterling’s view that, after having received responses from certain relevant governmental authorities, that the authorities are currently unable or unwilling to provide construction permits for offshore oil and gas activities.

The effect of this situation, which the company views as political in nature, is to render it impossible to undertake petroleum operations at present. Under the concession terms, NAMR must within 15 days of Sterling’s declaration either agree with the invocation of force majeure, which extends the duration of the concession, or reject the company’s invocation putting the two parties into a dispute resolution procedure that could ultimately be decided in international arbitration.

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