Frontera calls on Georgian PM to stop 'illegal termination of our contract'

Chairman of the Board of Directors of Frontera Resources Corporation Steve C. Nicandros and Chief Executive Officer Zaza Mamulaishvili has sent an open letter to the Prime Minister of Georgia Giorgi Gakharia in which they ask him to 'stop the arbitrary, illegal termination of our contract with the state' as it will worsen the climate for US private-sector direct investment in Georgia.

During these unprecedented, economically challenging times, now that the Georgian government’s legal action against us is over, the good news is that our company has been making preparations to resume oil and gas operations in the Kakheti region in accordance with the recent ruling. The bad news is that, in the aftermath of your government’s failure to achieve termination of our contract in the recent legal proceedings, representatives of your government now disregard the court’s ruling by still seeking to affect the unlawful termination of our contract and expropriate our holdings", reads the letter.

Nicandros and Mamulaishvili say that the business environment today is 'unwelcoming and increasingly dangerous' and this is not the country "we have come to love during our twenty-three years of dedicated corporate citizenship that has motivated us to invest over $500 million in our work to help Georgia achieve its oil and gas energy independence".

The letter reads that Frontera’s efforts to develop its domestic gas discoveries in eastern Georgia that could provide the Georgian economy with a competitively cheaper domestic gas source has been met with 'obstruction, contract cancellation, state-media disinformation and expropriation' while the government favours and welcomes the Russian energy giant Rosneft in 2013 that acquired ownership in the Black Sea port of Poti; Russia’s Gazprom and Azerbaijan’s SOCAR; China Energy Fund Committee that in 2016 was granted a 75 per cent controlling share in Tax-Free Industrial Zone of Poti; Iranian companies that 'have been a growing presence in Georgia’s private sector'.

• Georgia’s Economy Minister condemns Rosneft’s purchase of Poti Port shares

US companies like Philip Morris, ICONIA Capital, BMCN Holdings and The Conti Group have similarly been challenged when posing a competitive threat to “domestic interests” ... we have been subjected to Georgian state-owned media and Russian media smear campaigns that have produced curiously similar fakenews stories about our company, including incorrect negative reporting regarding our operations and the results of the recent arbitration court ruling. Why?", reads the letter.

How has the government responded to Frontera?

Georgian Economy Minister Natia Turnava has responded to the open letter of Frontera, saying that Frontera has lost the arbitration dispute and must fulfil its obligations.

She also called on the company to disclose the decision of the arbitration, which will shed light on who is right in this dispute. The parties have no right to make the decision public without the mutual consent. Georgian state-owned corporations say they will announce the decision if Frontera agrees while Frontera does not make comments. 

Our answer is very simple. We always respond to such statements from the company Frontera with meeting the international norms... if you want to get more information and find out the truth let's all together call on Frontera to make the decision of the international arbitration public", said Turnava.

Click here to find out more about the contractual dispute and arbitration between the Georgian Oil and Gas Corporation, the Georgian State Agency of Oil and Gas and Frontera Resources Georgia Corporation.