The planned sale of SK Innovation Co. of its participation in two Peruvian gas fields to a foreign partner was canceled, amid its disapproval by the Peruvian government, South Korean media reported.
As a regulatory report showed on Tuesday, the South Korean refinery said in its report that its contract with the Argentine energy firm Pluspetrol, to assign 17.6% of the stake in lots 88 and 56, located in the Cusco region, it was concluded.
“Despite our continued efforts, the contract has inevitably been terminated without completing the sale process, due to the Peruvian government’s stance against the sale,” the company said.
SK Innovation had reached an agreement, in September 2019, with Pluspetrol, which would have helped the firm obtain US $ 1,050 million in cash.
The Korean company had said it would use the money to increase its investment in other promising energy sectors, such as batteries and materials, and expand its presence in the Asian and North American markets.
Camisea: SK Innovation vs. Peruvian state
The case dates back to September 2019, before the pandemic, when SK Innovation agreed to sell its 17.6% stake in Camisea to Argentina’s Pluspetrol, which maintains a 27% position, for US $ 1,052 million.
However, the parties encountered the refusal of the Peruvian government due to the lack of approval of an anti-corruption clause in the transfer contract.
Peru obliged Pluspetrol to relinquish its rights over the Camisea deposit in case the company or other companies in the consortium were involved in any case of corruption, “anywhere and at any time, both present and future.”
For this purpose, the Peruvian State required the other partners of the consortium to sign the contract, among which are, in addition to Pluspetrol and the Korean company, Hunt Oil, Repsol, Sonatrach Y Tecpetrol. SK Innovation responded by stating that it was evaluating an international arbitration against the Peruvian State.
SK Innovation: Why didn’t you want to sign?
At that time, SK Innovation alleged that the Peruvian government’s position was a “violation of international law” and of the FTA between Peru and South Korea. For this reason, he warned that the blockade of the operation would also mean a loss of US $ 1 billion for the country, among other impacts.
“This decision to consider arbitration hurts us and we do not take it lightly, but SK is facing the threat of significant and irreparable financial damage and must protect its rights,” the company affirmed.
The closing of the agreement was subject to the approval of various Peruvian authorities, such as the state-owned company Perupetro, the Ministry of Energy and Mines (Minem) and the Ministry of Economy and Finance (MEF).
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