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One of the most aggressive buyers of North Sea oil and gas operations has dismissed allegations that it stripped millions of dollars of assets from a joint venture that later collapsed.
The case against Vialo Energy chief executive Francesco Mazzagatti had been brought in the UK High Court by Abu Dhabi’s state energy company Takaa and Britain’s Spirit Energy.
It’s a significant victory for privately held Vialo, which has acquired interests in around 15 oil fields in the UK’s North Sea, the Atlantic west of the Shetland Islands and off the coast of the Netherlands over the past five years.
The company is focused on extracting remaining reserves from fields within its territory, which are becoming depleted and difficult to develop.
Taka and Spirit allege Vialo deliberately removed value from their joint venture in the Bray oil and gas fields in the North Sea by declaring $84 million in dividends from the operating company known as UKCS8. did. The dividend was favorable to the parent company controlled by Vialo.
The case pitted the national oil companies of two of the United Arab Emirates’ seven emirates against each other. One of the defendants in the case, along with Vialo, is Fujairah Oil and Gas, the state oil company in the emirate of Fujairah, to which Vialo sold the Bray assets.
UKCS8 subsequently defaulted on payments of at least £35m to creditors and fell into bankruptcy.
The declared dividends offset the same amount scheduled to be paid by the parent company to the operating company, and no cash was received or received.
In a judgment handed down Friday, Mrs. Judge Diaz dismissed all claims of Mr. Taka and Mr. Spirit. She wrote that she was “unable to accept” the argument that the declaration of dividends was a “last desperate roll of the dice” to “scramble” UKCS8, which had been drained of all its assets in the first place.
The court heard that Taqa and Viaro were at odds over the future of the Brae assets, with Taqa keen to end production and Viaro keen to invest and continue production.
The problem is that at the end of 2020, UKCS8 was required to put up £110m of security under the Decommissioning Security Agreement (DSA), a mechanism for securing funding for the decommissioning of oil and gas fields. The situation reached its climax.
Viallo claims that it cannot immediately post collateral and that it sold UKCS8 to Fujairah Oil and Gas (FIOGC) so that the UAE company could use its credit rating as a state-owned company to provide the necessary guarantees. Ta.
“Having evaluated the witnesses and documentary evidence, we have determined that the sale to FIOGC was agreed for a legitimate commercial purpose, namely to break the impasse with Taqa and to enable us to provide the necessary DSA security,” the statement said. ,” the judge said. I wrote.
The dividend was a “necessary ancillary” to the sale, he added.
Mazzagatti said after Friday’s verdict that he was “very satisfied” with the outcome.
“Today, the High Court issued a very strong judgment in our favor, categorically rejecting all claims of Takaa and Spirit,” he said.
Meanwhile, Taka said it remains confident about the reasons why its British subsidiary Taka Buratani made the allegations.
“Taka Buratani will consult with its defense team and carefully consider next steps, including whether to file an appeal.”
Separately, a case filed in the High Court in November alleges that Mr Mazzagatti forged board documents to extract at least 100 million yen from his former company, Alliance Petrochemicals and Investments Ltd. of Singapore. He claims he stole 43.8 million euros.
The complaint alleges that he used at least some of the misappropriated funds to buy Rockrose Energy, the owner of the Bray assets. Mr. Mazzagatti and Vialo’s finance director Francesco Dixit Dominus deny the allegations.