The Canadian government is reportedly trying to reclaim nearly $350 million in insurance paid to Suncor Energy Inc. in the wake of political unrest in Libya, according to Canadian network Global News.
The oil giant claimed $300 million in risk mitigation payments for losses linked to Libyan energy assets after fighting between rival political factions spread to the country’s oil crescent region in 2015, a Federal Court judge said in a ruling this week, as reported by Global News.
The total — $347 million with interest — was determined by an arbitrator in 2019.
But Export Development Canada, which insures against losses caused by political violence, argues that Suncor’s oil production facilities still deliver returns for the Calgary-based company.
“According to EDC’s May 15, 2022, notice of arbitration, the Libyan assets continue to have significant value and generate revenue for Suncor and its subsidiaries. EDC seeks to recover the amounts realized in connection with the assets until the $347 million has been repaid in full,” judge Christine Pallotta wrote in the decision Monday.
Suncor, which did not respond to Global News’ request for comment, says on its website that operations there continue to be impacted by political upheaval.
“As of the end of 2015, production in Libya remains substantially shut-in given the political unrest. The timing of a return to normal operations remains uncertain,” the site states.
Suncor also froze exploration in the oil-rich country in 2011 after civil war broke out, culminating in the capture and killing of president Muammar Gaddafi. “The period of force majeure under its contractual obligations has since ended in Libya, and Suncor has restarted exploration activities,” the site says.
Suncor first built up its presence in Libya through Harouge Oil Operations, a joint venture with the state oil company in which Suncor has a 49 per cent stake dating back to 2008.
With the two main parties in the court standoff unable to agree on an arbitrator, the judge on Monday appointed one to handle the insurance case and denied a request from four Suncor subsidiaries to be removed from it.
The insurance claim was paid under a policy underwritten by Export Development Canada for Petro-Canada in 2006, which Suncor then came into following their merger in 2009.
“The relevant claim related to Suncor’s oil operations in Libya was received following the Arab Spring movement that began in the early 2010s,” the Export Development Canada spokeswoman Jessica Draker said in an email Wednesday.
“As EDC and Suncor are in active legal proceedings, we are limited in what we can share. … The ongoing arbitration between EDC and Suncor is a private process and is therefore confidential.’”
By the end of 2022, the exposure of the Crown corporation’s political risk insurance portfolio sat at $359 million, down from $2.81 billion in 2015, according to its annual reports.
“We stopped issuing new policies within this program in 2020,” the latest one states.
About 57 per cent of the portfolio lay in the Africa and Middle East region, a far higher share than any other area.