Canadian Overseas Petroleum Limited (LON:COPL, CVE:XOP) has informed investors of a dispute between its 50% owned Nigerian joint venture company ShoreCan and partner Essar.
The company said in a stock market statement that the disagreement concerns certain aspects of a document that governs the relationship between ShoreCan and Essar.
Shorecan is entitled to 80% of the jointly owned Essar Nigeria vehicle, which holds the interests in the OPL 226 offshore project, and it has certain commitments to the venture also.
READ: COPL ‘very pleased’ with financing progress for Nigeria venture
COPL noted that the disagreement centres on a view that ShoreCan has not commenced funding of US$80mln as agreed, though talks are ongoing between the two parties and no formal proceeding are presently taking place.
"We are as frustrated as Essar Mauritius is about the length of time it has taken to get the project to this stage,” said Arthur Mullholland, COPL chief executive.
“With progress being made on the financing front, we hope to resolve our respective issues quickly and amicably."
COPL further noted that the dispute presently has no quantifiable impact on the company's working capital or its operations. Its directors believe, based on legal advice, that ShoreCan has several valid defences and counterclaims to any action that might be brought by Essar in the event that the current disagreement escalates.
In the meantime, COPL added, ShoreCan continues to pursue the completion of ongoing financing initiatives and the OPL 226 venture continues to operate as before.