Australia-based Tap Oil said Monday that Northern Gulf Petroleum, Tap Oil’s partner in the Manora oil project, is in default for $27 million under the terms of its joint operating agreement for offshore Thailand concession G1/48.
Tap Oil said NGP has been in default since March 20 for failure to pay its 10 percent participating interest share of joint account expenses established by the joint operating agreement.
NGP is currently owes $27,079,863.37, Tap Oil said.
The G1/48 concession and the Manora oil development are operated by Abu Dhabi-based Mubadala Petroleum with a 60 percent interest.
NGP holds a 10 percent interest in the concession and Manora and Tap Oil holds a 30 percent interest.
Tap Oil said its joint operating agreement with NGP outlines various steps to resolve the default.
After five business days NGP could lose its entitlement to attend and vote at operating committee meetings and to access any data or information relating to petroleum operations.
After 30 days, proceeds from the sale of NGP’s share of Manora crude oil will be directed to the non-defaulting parties who have contributed to the default amount to be applied against such contributions.
Tap oil said that 60 days in default will trigger a compulsory transfer of NGP’s 10 percent interest to the non-defaulting parties who have contributed to the default amount.
Production at the Manora oil field, located about 50 miles offshore in water depths of 144 feet, started in November 2014.
The field was discovered in 2009 and the development was sanctioned in July 2012.
Production at Manora is expected to reach a peak rate of 15,000 barrels of oil per day from up to ten production wells and five injection wells in the main reservoir sequence.
The default is just the latest in an ongoing dispute between Tap Oil and Thai entrepreneur Chatchai Yenbamroong,
Yenbamroong holds a 19.98 percent stake in Tap Oil and also controls NGP and its Bermuda-based parent company Northern Gulf Petroleum Holdings.
Earlier this month Tap Oil said it started a strategic review to identify potential asset sale opportunities in response to a “recent change in market conditions.”
The review was partially prompted by a proposal from Yenbamroong to replace three of the company’s directors with his own nominees.
Tap said that if Yenbamroong’s proposal is successful it would “result in a change in control of the company without Tap shareholders being offered any control premium.”