Repsol Oil would pay BKV $21 million if arbitration award is affirmed by Pittsburgh judge

By Takesha Thomas | Mar 18, 2019

PITTSBURGH - The owner of an Allegheny County pipeline has won an arbitration award of more than $21 million over an alleged breach of contract with an oil company.

On March 6, BKV Chaffee Corners petitioned the Court of Common Pleas for Allegheny County to confirm and grant it $21,762,338.49 against Repsol Oil & Gas USA. In January, an arbitration panel issued its final award granting BKV $1,157.672 in attorneys' fees, $661,903.55 in costs and $13,663.18 in pre-judgement interest and $2,864 per day thereafter in post-judgement interest, court papers state.

According to court filings, Repsol violated the terms of agreement with BKV by transporting gas through a pipeline without paying the proper fees as required by the agreements between the two parties.

In September, an arbitration panel issued a liability award finding in favor of BKV. Then in December, BKV was awarded a second award of $19,931,129.76 in damages and attorney fees. However, the panel requested to have additional briefing to determine the "proper amount of the damages" to which BKV was entitled. 

According to court papers, BKV and Repsol entered into an joint exploration agreement (JEA) "to explore and develop oil and gas leasehold interests in the 'area of mutual interests'." As part of the agreement, both companies agreed that any disputes would be resolved through binding arbitration in Pittsburgh. The JEA also included "a facilities agreement which provides the parties rights with respect to the gathering systems owned and developed by the parties for gas production," court records show. 

Allegedly, Repsol began breaching the JEA and facilities agreement in 2014 when it began bringing its own gas from wells outside the area of mutual interest into the gathering system without consent of, or compensation of BKV. 

After discovering this, in July 2017, BKV served Repsol with a demand to arbitrate. 

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