A group of Israeli investors, including the general partner of Israel Opportunity, is demanding that the Government of Cyprus should declare C.O. Cyprus Opportunity and the international Norwegian operator ARG winners of the tender for Block 8 in the country’s economic waters, and receive its holding. The application to the Cyprus government is being made under the 1998 investment protection treaty between Israel and Cyprus.
The general partner, who also holds C.O. Cyprus Opportunity, claims that the Government of Cyprus infringed on his rights as an Israeli investor protected under the treaty, by refusing to grant the Cypriot partnership the ownership of Block 8, while discriminating against it in bad faith and deceptively. Sources at Israel Opportunity, controlled by Rony Halman and Uri Aldubi, estimate the damage they have sustained in the billions of dollars, and say the conduct of the Government of Cyprus casts into doubt the economic viability of Israelis’ investments in Cyprus. At the next stage, they intend to seek international arbitration against the Government of Cyprus at the International Center for Settlement of Investment Disputes established at the initiative of the World Bank, operating out of Washington.
Last week, Mekorot Development and Enterprise announced its intention of suing the Government of Cyprus under the investment protection treaty for damages of some €50 million euro.
The current demand has no connection to Israel Opportunity Energy Resources, LP, traded on the Tel Aviv Stock Exchange.
In 2012, the Government of Cyprus offered 12 exploration licenses (blocks) included in the territorial waters of the island. The licenses, covering a total area of more than 45,000 m2, border both on Israel’s economic waters and those of Egypt. According to an estimate of USGS, the area of the basin under the control of Israel and Cyprus has gas reserves of 122 TCF (trillion cubic meters). So far about 30 TCF have been discovered in Israeli territory, and in the Cypriot Block 12, according to Noble Energy publications, there is potential for about more 7 TCF.
C.O. Cyprus Opportunity submitted a request for Block 8, with the international Norwegian operator AGR, with which Israel Opportunity is cooperating in the Pelagic Licenses. C.O. Cyprus Opportunity, listed on the Cyprus stock exchange, was to own about 70% of the Cypriot partnership, and AGR about 30%.
29 companies in 15 groups took part in the tender in Cyprus, but C.O. Cyprus Opportunity was the only group that submitted a request to receive Block 8, because most of the interest was in blocks with potential for finding gas in the geological layer known as Tamar Sands.
In May 2013, the Government of Cyprus suddenly announced to the Cypriot partnership that its bid had been disqualified. In July 2013, the company filed a petition in the Supreme Court of Cyprus, but, although the petition has not yet been ruled on, the Government of Cyprus published another tender, in March 2016, for issuing licenses, including Block 8. In the current tender, there is great interest in Block 8, because the enormous Zohr discovery in Egypt proves that the geological layers in the area of the block are rich in hydrocarbons, as assessed by C.O. Cyprus Opportunity in the previous tender.
Adv. Niv Sever of the M. Firon and Co. Law Office, representing the investors in the proceeding, will be sending a demand letter to the Government of Cyprus, demanding that Cyprus engage in immediate negotiations with the Israeli investors to settle the dispute. Should the Cypriot partnership not reach an understanding with the Government of Cyprus, according to the treaty the Israeli investors group may instigate an international arbitration proceeding against Cyprus.
Halman, who is chairman of C.O. Cyprus Opportunity and one of the controlling shareholders of Israel Opportunity, said, "The conduct of the Government of Cyprus and of the judiciary system in the country is completely in contravention of normal international business conduct. This poses major questions as to the willingness of the Cypriots to cooperate strategically with Israel and Israeli companies and raises true concern regarding the economic viability for Israeli investors to promote investments in the country. We intend to go all the way, using all tools at our disposal, to force the Government of Cyprus to safeguard our rights.”
Published by Globes [online], Israel business news - www.globes-online.com - on October 10, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016