Providence warns Chinese it could be taking legal action
OIL and gas explorer Providence Resources will consider taking legal action against Chinese backer APEC if it fails to receive a $9m (€8.2m) funding advance by close of business next Monday.
The loan was due to be received by the Tony O'Reilly Jnr-headed company on September 2, in what was the latest in a series of delays in the funds being transferred.
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Providence said on Tuesday that it has issued a notice to the Beijing-headquartered group that "should the APEC loan amount not be received by the close of business on that date [September 9], the company reserves the right to end exclusivity, while also considering all legal remedies available to it against APEC for contract non-performance."
This includes the reallocation of equity in the Barryroe prospect off the coast of Cork.
Under the agreement with APEC, agreed in March 2018, the Chinese group will have a 50pc interest in Barryroe - which has a predicted 311 million barrels of recoverable oil - in exchange for it covering half of the estimated $200m costs associated with the drilling programme.
Last month, Providence secured permission from the Minister of State at the Department of Communications, Climate Action and Environment to undertake a seabed debris clearance and an environmental baseline and habitat assessment site survey over the area of the Barryroe field.
The vessel to undertake the survey has now arrived on site, and operations are expected to commence later this week.
At least two locations will be surveyed at this time, with scope to increase the number of locations upon receipt of the APEC loan, Providence said.
The Irish oil and gas explorer yesterday also said it is "actively exploring" alternative financing arrangements in order to provide it with sufficient working capital beyond the end of the month in the event that the APEC funding is not received.
Last month Providence announced job cuts and other immediate cost-saving measures to address a cash crisis, with no sign of promised finance arriving from China.
Employees who have been made redundant are no longer reporting to work. However, the redundancy packages for those former staff members will not be implemented until funding from APEC or "alternative finances" have been secured, the company recently said.
"Subject to the receipt of the loan advance or alternative financing arrangements being put in place, final settlement agreements agreed between the company and the staff will be signed, and the redundancies will be implemented," Providence said in a statement in August.
Since the start of this year shares in Providence have fallen by over 51pc.