Companies

Canadian firm locked in court battle over Kenya exploration deal

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Oil drilling in northern Kenya. PHOTO | FILE

A Canadian company is locked in a dispute with an Isle of Man-based miner Barakat Exploration which has accused it of failing to pay consultation fees related to a Kenyan oil exploration deal.

Barakat Exploration has filed a suit at the High Court in Nairobi where it has accused Canada’s Taipan Resources of refusing to honour payment for services rendered by the Isle of Man explorer which was to negotiate a Sh500 million product-sharing deal with the government. The deal was also to oversee Taipan’s merger with another exploration firm, Lion Petroleum Corporation.

The Canadian firm successfully merged with Lion Petroleum, and the two have a 50-50 cost sharing deal over exploitation of two oil blocs, 1 and 2B, in North Eastern Kenya. Barakat has alleged that it carried out the agreed duties, but that the Canadian firm has failed to remit to it the Sh50 million it was to pay for the services rendered.

“The merger was successful and subsequently Barakat negotiated with the Government of Kenya and a one-year extension was granted. Taipan was allowed to pay $4 million (Sh355 million) and it thereafter posted a performance bond,” said Barakat in suit papers. Barakat added that after performing the services, Taipan failed to pay it the initial CAN$500,000 agreed upon, but agreed to pay it CAN$626,000 in instalments.

Taipan’s chief executive officer Maxwell Birley has since denied that the two had a binding agreement, and claims that none of the documents attached as evidence by Barakat prove otherwise. The Canadian firm’s application to strike out the suit was thrown out by Lady Justice Jacqueline Kamau, which saw Barakat send it a demand letter for the Sh50 million it allegedly owes.

Taipan has however filed another application seeking to be granted permission to contest the ruling despite the lapse of the 14-day timeline allowed for appeals. It has argued that it was not notified of the ruling date and was aware that Lady Justice Kamau’s decision was still pending.
Joel Dumaresq, Taipan’s chief finance officer, said in suit papers that his firm only found out on July 14 that the ruling had been delivered in May and that Barakat had sent a demand letter dated June 16 for the money to its Vancouver office.

“There has never been any performance by Barakat and as such it is not deserving of the contract sum of CAD$626,000,” added Mr Dumaresq.

Lady Justice Kamau directed that the two parties file their respective responses to the claims in Taipan’s application to be allowed to contest her ruling by October 1.