Tuesday 2011-08-16  16:13 Publisher: CapitalVue

August 15 – The joint venture (JV) of China Petroleum and Chemical Corporation (Sinopec) (600028.SH) and Melbourne-based AED Oil Limited was ordered by the International Court of Arbitration of the International Chamber of Commerce (ICC) to pay US$60 million in compensation to Norway-based SeaProduction Limited for the shutdown of an oil drilling platform, reports the National Business Daily, citing an unnamed source.

Sinopec spent $561 million to acquire AED’s 60-percent stake in the Puffin oilfield JV in the Timor Sea three years ago. But the oilfield had been gradually reducing operations since 2009 because of safety problems. The shutdown resulted from the Puffin oilfield JV’s accusation that SeaProduction, the platform operator, had violated safety standards.

The source cited an expert from Sinopec’s research institution who said that the question of whether or not the JV will pay the US$60 million depends on who the user of oil drilling platform was determined to be.

Sinopec, PetroChina (601857, 0857.HK) and Oilfield Services (601808) had invested $70 billion in total 144 overseas oilfields and oil drilling programs by the end of 2010, according to statistics from the China Petroleum and Chemical Industrial Association. However, two-thirds of the three petroleum giants’ overseas oil programs incurred losses.