Repsol announced today that it will make a provision of 837 million euros in view of the partial award issued by the arbitral tribunal of Singapore. This provision covers the set of open litigation that is divided into five claims, so there are four partial awards on the rest of the claims, and will be reflected in the financial statements for the year 2019. Likewise, the company is analyzing the different actions judicial that fit this partial award and foresees its challenge before the courts of Singapore.
The conflict comes from the Chinese companies Addax and Sinopec initiated in 2015 an arbitration proceeding in Singapore against Talisman Energy Inc (currently Rogci) and Talisman Colombia Holdco Limited (TCHL), regarding the purchase materialized by the first in 2012 of 49% of the shares of Talisman Energy UK Limited (TSEUK) to the Canadian group Talisman.
In said arbitration, regarding events that took place in 2012, before the acquisition of Talisman by Repsol in 2015 – which does not imply any action carried out by Repsol -, Addax and Sinopec requested, in the event that their claims were estimated in its entirety, an approximate figure of 5,500 million US dollars (about 5,000 million euros), which according to your requests, would correspond to the amount of your initial investment in TSEUK and any subsequent investment increases, made or to be made in the future, as well as the opportunity losses that could have occurred.
On the other hand, on November 30, 2017, Repsol SA started another arbitration against China Petroleum Corporation and TipTop Luxembourg claiming compensation for the damages that it could suffer as a result of any adverse decision in the arbitration mentioned above, along with other damages not yet quantified This procedure is based on the conduct, by those, in front of Repsol, during the previous months leading to the acquisition of the Talisman group.
In relation to the procedure initiated by Addax and Sinopec, Repsol informs that the Arbitral Tribunal issued a first partial award in 2017 rejecting its claims, based on breach of contractual guarantees. Likewise, it decided, among other procedural matters, the bifurcation of the procedure in two phases: in the first one it would decide on responsibility and in the second, on the amount of the responsibilities that, if any, had been determined.
In 2020, the Arbitral Tribunal issued a second partial award on one of the five issues of the liability phase and, although Repsol had considered – based on the external advice provided to it – and continues to consider that the corresponding claims are unfounded , the Court has decided that ROGCI and TCHL are accountable to Sinopec and Addax with respect to that matter.
The aforementioned partial award addresses one of the five claims regarding liability. The Court has indicated that it will decide the result of the remaining ones in due time, through subsequent awards, although the time at which they will be issued is currently unknown. In principle, once all of them have been decided, a new procedural phase will be necessary to determine the amounts, whose schedule has not yet been established. It is likely that this calendar should include deadlines for new written arguments, evidence, additional expert statements and a new oral hearing. It is estimated that the phase related to the determination of the amount, without taking into account any challenges to the awards, will not be resolved before the first quarter of 2022.