Sinopec Files 5.5 Bn Dollars Arbitration Notice Against Repsol

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Repsol’s purchase of Canadian oil company Talisman has had it good and bad side. The Spanish company has doubled its recurrent synergies from 220 million dollars annually to 400. But the transaction has also resulted in it being slapped with a 5.5 billion dollars arbitration notice by the Chinese group Sinopec, according to information published today by Spain’s stock market regulator CNMV.

Repsol bought Talisman in 2015 for 5.5 billion dollars (4.883 billion euros at current exchange rates), which is the amount it commited to the joint venture Tseuk, which operates in the UK.

On July 13 2015, Sinopec, a state-owned petroleum and petrochemical group, and its subsidiary Addax Petroleum presented an arbitration notice against Talisman Energy Inc. (TEI) and Talisman Colombia Holco Limited (TCHL) over the purchase of 49% of Talisman Energy UK Limited (TSEUK), a company created in 2012 by the Chinese firm and the Canadian company to operate in the UK sector of the North Sea. It is valued at around 1.5 billion dollars.

In Repsol’ view, the formal arbitration claim is “groundless and inconsistent with the loyalty to be expected from a business partner. The claim has commenced almost three years after buying a stake in TSEUK and participating fully at management level and in all decisions taken by the company since then, without expressing any worries or making any complaints. Addax has now chosen to commence legal proceedings trying to gain an illegitimate advantage for its own benefit.” Repsol also considers that the arbitration notice implies a “remote risk.”

Repsol closed the purchase of Talisman Energy in 2015 for 10.4 billion euros, including debt.

 

*Image: Repsol