Total Slovenia News | 23 March 2021

Ascent Resources starts arbitration process against Slovenia, claims over €100mn damages

STA, 23 March 2021 - The British company Ascent Resources has announced it will initiate arbitration proceedings against Slovenia over the dispute over permits for the extraction of gas by means of hydraulic fracturing in Petišovci (NE), after the state had failed to set forward a damages proposal. The company has estimated damage to be in excess of EUR 100 million.

Claiming that Slovenia is breaching its obligations to the detriment of the company’s investments in Slovenia, procedures to start an investor dispute at international arbitration were formally started by Ascent Resources last July.

This could not happen before a three-month period has passed in which the parties would have the opportunity to settle the dispute amicably.

The two sides entered negotiations last October, but the British company said this would not prejudice its rights to pursue its investment treaty claim under the UK-Slovenia bilateral investment treaty and the Energy Charter Treaty.

The deadline for a possible settlement in the direct negotiations had been set for 19 March this year.

The latest announcement from Ascent Resources comes after the State Attorney’s Office told the STA last Saturday that Slovenia had rejected an amicable settlement with the company as the deadline for the decision expired on Friday.

The British company said on its website it "intends to initiate arbitration proceedings against the Republic of Slovenia" and "confirms that an amicable settlement is presently not achievable."

It added that as part of direct pre-arbitration settlement discussions, it had "submitted a damages calculation to the state totalling significantly in excess of EUR 100 million."

The Slovenian Environment Agency issued a decision in March that an environmental impact assessment is needed before a permit can be issued for extraction of gas in Petišovci by re-stimulating two currently producing wells as planned by Ascent Resources and its Slovenian partner Geoenergo. The decision was upheld by the Administrative Court in June this year.

Ascent Resources said in the same release that "it is ultimately expected that the pressure at PG-11A will decline to unsustainable levels without mechanical stimulation (which forms part of the damages claim against the state)."

However, it added that it was pleased PG-11A was currently producing and that it intended to continue production whilst it was possible to do so.