Primeline to Commence Arbitration Against CNOOC Over China's Offshore Block

China-focused Primeline Energy Holdings Inc. notified China National Offshore Oil Corp. (CNOOC) Tuesday of its plans to commence arbitration proceedings against the latter under the provisions of the Petroleum Contract for Block 25/34 in the East China Sea.

The arbitration relates to Primeline’s ongoing spats with CNOOC over the development, production and sales of gas from the LS36-1 Gas Field in Block 25/34.

"Primeline has appointed an arbitrator and will file the formal Notice of Arbitration in accordance with the UNCITRAL (United Nations Commission on International Trade Law) Arbitration Rules 1976 and the arbitration agreement under the Petroleum Contract for Block 25/34," the firm said in the press release.

The latest legal development is separate from the previously announced China International Economic and Trade Arbitration Commission arbitration proceedings by Primeline against Zhejiang Gas Natural Gas Development Company Limited over payment of unpaid and partially paid gas sale invoices.

Primeline may face default under its project finance loan with China Development Bank, China Export and Import Bank and Shanghai Pudong Development Bank without full payment from Zhejiang Gas and continued operation of LS36-1 by CNOOC as operator. Primeline is holding talks with the banks to secure their support during both arbitration proceedings.



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