Sterling Deems All Charges Against It Are False, Romanian State Is Sole Culpable

"Sterling has never been officially notified on having breached the law. All the charges are false. We were accused of having changed the terms of the deal, from the exploration and production distribution into exploitation and payment of some dues. We have been having the exploitation right since the beginning, through the deal initially signed in 1992. We were also accused that through additional act 11 from 2007, the state lost the right to take part in the production sharing, but the state self-annulled this right, not Sterling, through the Oil Law, which introduced dues instead of production sharing," Birrell said.

 

Birrell was heard Tuesday by the deputies with the Commission for Industries and Services within Romania’s Chamber of Deputies, on the deal between Sterling and the Romanian state.

 

The deal targeted the oil exploration and exploitation of two perimeters in the Black Sea.

 

Birrell equally answered all charges brought against the company he represents.

 

"We were accused of not proving our technical and financial creditworthiness. We have been operating on the Romanian market since 1993, and this had not happened without the government approving our technical and financial capability. We have all the necessary authorizations and licenses. The National Agency for Mineral Resources (ANRM) has never asked for any certificate or proof of our creditworthiness," Birrell also said.

 

ANRM president Gelu Maracineanu previously accused Sterling that it has never officially proved its financial and technical creditworthiness to develop oil operations in the Black Sea and it does not have the necessary authorizations to develop the oil operations in Romania.

 

"Several checkups took place at Sterling, the last one in April 2009, but nobody told us we lack the necessary permits or we breached the Romanian or European legislation," according to Birrell.

 

Birrell said he is affected by the false statements on the contract between Sterling and ANRM and hopes the Commission’s probe develops based on facts and not on charges.

 

Based on the initial deal, Sterling was entitled to exploration and exploitation rights as well as various incentives, such as the exemption from paying taxes and dues. These were all negotiated with the Romanian Government and further mirrored in the 45% quota from the oil production the state was entitled to.

 

The production distribution mechanism has not been enforced with the Romanian state since 1995, namely since the Oil Law enactment which introduced the dues payment.

 

Birell also said that in 2001, the Government confirmed in a letter the exemption from taxes and dues of the companies subject to with leases in Romania.

 

"The proof is a joint note signed by ANRM’s president and by Iulian Iancu, who was at the time secretary of state with Ministry of Industries," Birrell said.

Iancu, a deputy with the Social Democratic Party PSD, is currently the president of the Commission for Industries and Services within Romania’s Chamber of Deputies.

 

Birrell added that Sterling has invested over $65 million from 1997, in the leases in Romania, and the company employs 12 executive people, answering the accusations it employs only one person.

 

Iancu asked Birrell, during the hearing, how could he explain that based on the grounding note of the additional act 11 in 2007, Sterling invested in Romania $70 million, more than the company’s official had announced.

 

Birrell answered the document was not drafted by Sterling and the probable reserves in the Black Sea perimeters set to 7.6 billion cubic meters of natural gas, and the company found no crude oil. Iancu also asked him to explain the 2.2 billion cubic meters of gas from the grounding note.

 

"The note was drafted before we drilled the well in Ana structure, namely in 2007. The 2.2 billion cubic meters of gas might have referred to Doina 1 perimeter, which was drilled before Ana well. We could present you the audit report, which describes all the findings we made, if you wish," Birrell said.

 

In 1992, Rompetrol, representing at that time the Romanian authorities, and a consortium made up of Enterprise and Canadian Oxy companies sealed an exploration deal by which Romania received 45% of the crude oil production obtained out of two oil perimeters.

 

The deal was taken over afterwards by Paladin company and transferred in 1997 to Sterling Resources. In 1993, Rompetrol was privatized and its place in the Sterling deal has been taken by ANRM.

 

The lease in the Black Sea, granted by the Government in 1992, was extended, successively, by all Romanian governments, the decision of the latest Tariceanu government in November 2008 not changing the content of the agreement.

 

An appendix of the oil-drilling contract closed between ANRM and Sterling Resources refers explicitly to the dispute between Romania and Ukraine, specifying that the exploration right will become an exploitation one after The Hague Court’s decision.

 

The International Court of Justice at The Hague drew on February 3 a new maritime border between Romania and Ukraine, settling a decade-old dispute. The ruling gives Romania 9,700 square kilometers of exclusive economic zone, accounting for 79.34% of the 12,000 sq km disputed surface, an area said to include about 70 billion cubic meters of natural gas and 12 million tons of oil.

 

Thus, the Court’s decision and an appendix to the exploration contract give Sterling exploration rights in blocks XIII Pelican and XV Midia in the Black Sea.

Romanian Chamber of Deputies voted early-April the decision draft on allowing the Industries Commission to carry out an investigation regarding the oil agreement of Sterling Resources in the context of the amendments brought to the Oil Law.