Orca units submit arbitration requests against Tanzania

Executive Summary

• Orca Energy Group Inc. has initiated international arbitration proceedings against the United Republic of Tanzania and Tanzania Petroleum Development Corporation (TPDC) regarding the Songo Songo gas-to-electricity project.
• The arbitration claims arise from alleged breaches of the Bilateral Investment Treaty (BIT), Production-Sharing Agreement (PSA), and Gas Agreement (GA), including failure to extend development licenses, imposition of unfavorable regulatory regimes, and unpaid royalties.
• The company values the project at approximately $1.2 billion USD and intends to appoint a quantum expert to determine specific damages as the proceedings evolve.

Key Details

• Arbitration Filings:
  • Subsidiary Pan African Energy Corp. (Mauritius) (PAEM) submitted a request for arbitration to the International Centre for Settlement of Investment Disputes (ICSID) against the United Republic of Tanzania for breaches of the BIT between Mauritius and Tanzania.
  • Subsidiary PanAfrican Energy Tanzania Ltd. (Jersey) (PAET) submitted two separate requests for arbitration to ICSID against Tanzania and TPDC for breaches of the PSA and GA dated October 11, 2001.
• Alleged Breaches by Tanzania/TPDC:
  • License Extension Failure: TPDC failed to timely apply for an extension of the Songo Songo development licence (expiring Oct 10, 2026) as contractually required. When TPDC eventually applied in late November 2024, it did so unilaterally with terms that would render the project commercially unviable, and Tanzania has refused substantive dialogue since.
  • Protected Gas Regime: Contrary to the PSA and GA, TPDC imposed the continuation of the "Protected Gas" regime after July 31, 2024, undermining the commercial balance agreed in the project agreements.
  • Unpaid Royalties: TPDC failed to pay royalties owing under the contractual framework and attempted to compel PAET to cover these obligations.
  • Harassment: Ongoing regulatory and administrative pressures by Tanzanian state agencies have eroded the stability of the investment environment.
• Project Valuation: The company currently values the Songo Songo project at approximately $1.2 billion (U.S.).
• Damages Assessment: The precise amount of damages will be determined during arbitration; PAEM and PAET expect to appoint a quantum expert to prepare a professional damages assessment.
• Legal Representation: PAEM and PAET are represented by Boies Schiller Flexner LLP.
• Dispute Resolution History: A notice of dispute was issued on August 7, 2024. Extensive efforts to resolve issues amicably over the subsequent year failed due to lack of meaningful engagement from Tanzania and TPDC.

Notable Quotes

• Jay Lyons, CEO: "Following a mutually successful partnership over the past 20 years, we were disappointed to have to have been compelled to initiate international arbitration proceedings against the United Republic of Tanzania and Tanzania Petroleum Development Corp... Despite our continued willingness to reach an amicable resolution, the lack of meaningful progress has left us with no viable alternative but to take decisive legal action to protect the rights of PAET and PAEM and the interests of our shareholders."