Adair Hints at Filing Lawsuit against Ministry of Oil [Archives:2001/35/Front Page]

August 27 2001

In a letter sent to Yemen Times on Tuesday August 21, John W. Adair, the Chairman and CEO of Adair International Oil and Gas, Inc. expressed his shock and disappointment at the Yemeni Ministry of Oil and Mineral Resources for removing Adair as operator from block (20) in the Mareb/Shabwa region.
“How can the Ministry remove a company as operator from an exploration block when the operator has met all of its obligations as per the Production Sharing Agreement (PSA) and Joint Operating Agreement (JOA)?” Mr. John Adair exclaimed.
The letter, which had its copy sent to the US Embassy in Sanaa and the Yemeni Embassy in Washington D.C., inquired about the justifications of the Ministry’s actions and perhaps lead to an explanation to the actual reasons behind the removal. “There could be some issues that I do not understand and needed to be explained.” he concluded.
Attached with the letter was a copy of another 3-page letter from the attorneys representing Adair to the Minister of Oil, Dr. Rasheed S. Baraba, dated July 7, 2001. In the letter, the attorneys requested the Ministry to redress the unprecedented action in the removal of Adair. This was an unauthorized action from the operating Committee, which was orchestrated by Occidental Yemen Sabatain, Inc.
In a legal point, the attorneys see the action of the ministry as illegal, in view of the two agreements which were signed between Adair and the Ministry that gave Adair exclusive rights as operator of the block. “Adair has fully complied with its obligations under both agreements.” the letter states.
Adair lawyers say that they have a strong stand, especially that “the Parliament and President of Yemen approved both the PSA and JOA,”. The attorneys also claim that the actions of the Ministry are ineffective because “Article 18.2 of the PSA requires their approval for any alteration of Adair’s rights as operators.”
At the end of the letter, the lawyers hinted towards pursuing a legal recourse against the Ministry. “If this matter is not redressed immediately, Adair will be forced to seek redress by other means., The necessary process would distract the time, attention, and resources of the participants away from exploration and development.”Yemen Times contacted the Minister of Oil and inquired about the case. The Minister replied by saying that, “the matter of dispute is between the partners in block (20) according to the JOA and other agreements signed with the partners. Based on those articles, the other partners who represent the majority decided to remove Adair as operator and giving the operation rights to Occidental. Following this step, they requested that the Ministry approve their agreement. This is what the Ministry did to ensure that operations continue smoothly.”The Minister also adds that “the Ministry studied the subject and realized that there is a real dispute between the partners in Adair itself and between Adair and the other partner in the block. If this dispute doesn’t end soon, it could potentially damage the oil exploration operations in the block. Hence the Ministry, based its decision of removing Adair as operator of block (20) according to the majority’s decision to have operations continue. I believe that those partners need to solve their disputes away from the Ministry. Indeed, the partners representing the majority have already filed a lawsuit at the Paris-based arbitration court. Adair needs to challenge the lawsuit through legal ways and should not use any mediums not mentioned in the signed agreements. The court selected by the partners will consequently end the dispute amongst themselves with a final verdict, which should be respected by all sides. The issue needs no further escalation that could negatively affect any attempts to bring partners to a common understanding and cooperation, especially that Adair still owns its share of block (20). The Ministry had acted in the interest of all partners, and it is certainly not part of the conflict.”