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Canadian oil firm to sue Kenya over licence revocation

A Canadian oil exploration company expelled from Kenya last year has restructured in what it terms “preparation” for a fight with government for Sh13 billion in compensation for illegally terminating its license.

Vanoil, a Canadian firm that was exploring for oil and gas in Kenya, retired its president Sam Malin and replaced him with Don Padgett, who is said to have a wealth of experience in dealing with investment in “troubled countries”.

“The board of directors has instructed management to conduct an immediate review of all company operations.

The priority goal is to eliminate non-essential costs, dispose of non-productive assets and secure sufficient funding to enable Vanoil to aggressively pursue its legal arbitration against the Republic of Kenya,” reads a statement posted on Vanoil’s website.

Vanoil disputes the revocation of its licence for blocks 3A and 3B located in Garissa which was ordered by Energy and Petroleum CS Davis Chirchir in February on the grounds the company had failed to carry out minimum exploration work in the blocks as required under the production sharing contract.

Vanoil has already written to the government about its intention for arbitration, and it is understood that the government has already started preparing its response to the issues raised by the exploration company. Its only known assets are in Kenya and Seychelles.

The production sharing contract, which all firms exploring for oil and gas must sign with the government, sets out the minimum work such firms should carry out within the tenure of the contract.

In its notice of arbitration, Vanoil said it was unable to drill at the sites because “operations were significantly impaired by incidents of local disturbance and unrest.




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