Georgian Ministry of Economy proposes Frontera Resources resolve dispute via negotiations

Georgian Ministry of Economy proposes Frontera Resources resolve dispute via negotiations

The Ministry of Economy and Sustainable Development of Georgia has proposed American company Frontera Resources to resolve an ongoing dispute by compromise.

The ministry invited the company to negotiate and continue cooperation after US senators and congressmen wrote a letter to Secretary of State Mike Pompeo, expressing concern about the persecution of Western businesses in Georgia.  

Earlier, the ministry reported that the dispute between the Georgian state and Frontera had been settled by an arbitration court in favor of Georgia and there was nothing more to discuss with the company.

What does the proposal of the Ministry of Economy mean?

The dispute in international arbitration between the state and Frontera Resources ended two months ago and was resolved in favor of the Georgian side, Deputy Economy Minister David Tvalabeishvili said.

“We are ready to discuss these issues with the company and try to find  a compromise so that we can continue to work in fields owned by Frontera, under certain conditions, of course, having received the appropriate guarantee. In this regard, we urge Frontera to hold a meeting to discuss these issues,” Tvalabeishvili said.

Frontera and its dispute with the state

Frontera Resources is an American oil and gas company that has been operating in Georgia since 1997. During this time, the company has repeatedly announced the discovery of significant gas fields.

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However, a dispute arose between the company and the state over the implementation of the contract by the company.

According to the Georgian State Oil and Gas Agency, the arbitration court found a significant breach of the contract by Frontera and ordered the company to pay six million dollars to the Georgian side.

For its part, Frontera claims that the government is lying and that the arbitration dispute has been resolved in favor of the company. However, none of the parties have disclosed the substance of the dispute or the decision of the arbitration.

Frontera is mentioned in a letter sent by a group of US senators and congressmen to the Secretary of State and Secretary of the Treasury on May 15. It talks about the problems that American investors are experiencing in Georgia.

On June 2, company executives sent a letter to Georgian Prime Minister Giorgi Gakharia, stating that the business environment in Georgia has deteriorated, that the country’s authorities do not recognize the rule of law and use the court as a weapon.

In its letter, the company called on the prime minister to continue cooperation, which should be “an encouraging signal for American companies.”