US oil exploration company Frontera accuses Georgia of ‘anti-Americanism’

American company Frontera Resources has sent a letter to the Prime Minister of Georgia Giorgi Gakharia, in which it claims that the business climate has worsened in the country, the rule of law has ceased to operate, and the court is being used by the authorities as a lever of pressure.

“Since 2013, we have been facing an increase in anti-American sentiment and discriminatory attitudes towards American investment and American non-governmental organizations, as well as systematic violation of free market laws. Instead, a Russian-type kleptocracy has begun to strengthen in Georgia, camouflaged under American democratic values and a free market. 

“This political image is propped up only in exchange for the assistance of the US government. We must put an end to this farce,” said a letter from the chairman of the board of directors of Frontera, Steve Nikandros, and the president of the company, Zaza Mamulaishvili. 

The authors of the letter remind the prime minister that since 2013, the Russian energy giant Rosneft has been working unobstructed in Georgia bypassing US sanctions with violating Georgian laws.

In matters of gas supply, the country’s authorities have given preference to Russian Gazprom and Azerbaijan’s Socar, negotiated with Iran, and Frontera’s attempts to provide cheaper and more competitive natural gas to eastern Georgia’s consumers came up against attempts by the authorities to cancel the contract with it, the letter said.

Frontera executives believe that they are faced with a biased attitude by the Georgian authorities, despite the fact that during their activities in the country they have invested more than $500 million, and also discovered a hydrocarbon field that can provide Georgia with a degree of energy security.

The letter expresses hope that the Georgian government, declaring its desire for a strategic partnership with the United States, will stop legal attempts to terminate the contract with the company and begin “constructive cooperation” with it, which will be an encouraging signal for other American companies.

• Georgia will receive from the European Union 500 million euros if it fulfills its obligations

Response of the ministry of economy of Georgia

Natia Turnava, the minister of economic and sustainable development of the country, answered the letter addressed to the prime minister of Georgia. 

The minister’s statement reminds the leaders of the American company that the international arbitration court ruled in favor of the Georgian state, and based on this, Frontera is invited to implement this decision in a timely manner.

The verdict of the Stockholm Arbitration Court says that Frontera violated contractual obligations, in particular, its allegations of the discovery of hydrocarbon deposits in Georgia are unfounded. According to the decision of the arbitration, the company must pay the Georgian side $6 million.

The contract between the State Oil and Gas Agency of Georgia and Frontera will be terminated on July 27, 2020.

Recall that the problems of Frontera and other American investors in Georgia, a group of senators and congressmen on May 15 this year  in writing , told the US Secretary of State and the Secretary of the Treasury.