Vanoil Energy Ltd. has commenced an international arbitration against the Government of Kenya. This action has been filed to resolve a dispute arising from the Respondent’s breach of the Production Sharing Contracts (the “PSCs”) for Blocks 3A and 3B.Vanoil commenced drilling operations at the Madogashe-I drill site (Block 3A) in Kenya prior to July 31, 2013, as part of the Company’s commitment specified in the amended PSCs for Blocks 3A and 3B. The Company was unable to drill, however, because drill site operations were significantly impaired by a number of incidents of local disturbance and unrest.

The Company was directed by local government authorities to reduce and then delay operations until a safe return to the site could be provided. The Company’s decision to proceed with a formal arbitration demand follows prolonged discussions with Kenyan officials regarding an extension of the PSCs for Blocks 3A and 3B in order to accommodate the lengthy delays experienced at the drill site and give the Government of Kenya sufficient time to provide Vanoil with secure and safe access to its site, in order to complete its two-well program.

Vanoil is seeking not less than US$150 million as full and proper restitution for its seven years of exploration and development, based upon the net present value of its investment in Kenya, to which it is entitled under the PSCs.

Source: Vanoil Energy Ltd

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