CNOOC Says Has Filed Counterclaim in Tangguh LNG Lawsuit
CNOOC Ltd. (CEO) has raised the stakes in a legal dispute with Talisman Energy Inc. (TLM) over an Indonesia gas project by making a counterclaim against the Canadian oil producer.
The move, revealed in CNOOC 's interim financial report recently, comes after Talisman filed a lawsuit claiming a share of the Chinese company's 17% interest in the $5 billion Tangguh project, which is expected to begin commercial production of liquefied natural gas sometime in 2008-09.
It means that the court hearing into the lawsuit has been delayed until March next year. The case was originally due to be heard at the 68th District court in downtown Dallas, Texas, in November.
No further details were provided by CNOOC in relation to the nature of its counterclaim, which is being made against Paladin Resources, a unit of Talisman.
CNOOC said the outcome of the case was "too uncertain" for it to make a provision in its accounts at this stage.
Talisman Chief Executive Jim Buckee said in June that he hoped the lawsuit with CNOOC would be settled out of court.
When contacted by Dow Jones Newswires on Tuesday, company spokesman Barry Nelson said: "Aside from that (comment from Buckee) we have no comment to make about this legal action."
The Tangguh LNG project, one of CNOOC's largest overseas investments, is seen as an important source of natural gas for the Fujian region in southern China.
CNOOC purchased an interest in Tangguh in February 2003 and increased its stake in 2004.
The case dates back to a 1968 agreement that involved Independent Indonesian American Petroleum Co. and Warrior International Corp., a company that was later merged into Talisman following a series of deals.
The Talisman unit maintains the company has rights to Indonesian assets that have survived the various mergers.
In its interim report, CNOOC says the case was brought by an "alleged successor in interest to a joint operating agreement related to (the) Southeast Sumatra production sharing contract working area in Indonesia."
"The litigation has advanced to the framing, but not yet the decision, of certain key legal issues that are fundamental to whether the plaintiff has any rights with respect to the Tangguh LNG project," CNOOC said.
CNOOC said it expects a judicial evaluation by the court and a court-appointed mediator of certain key defenses in the near future. It is also seeking a jurisdictional appeal.
"Presently (CNOOC) considers the outcome of the case too uncertain at this stage to form the basis for making any provision in connection with the potential outcome of the case," CNOOC said.
Copyright (c) 2007 Dow Jones & Company, Inc.
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