pabloodonn
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- Oct 28, 2024
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The arbitration case between Oryx and Oilcom has brought significant attention to the intricacies of oil importation contracts and the subsequent legal claims arising from them. The final award, issued by the arbitral tribunal on November 30, 2023, and signed by Hon. Dr. Engera Kileo, Hon. Sophia Wambura, and Prof. Mussa Assad, attributes more than 80% of Oilcom’s claim to “failure to provide a minimum of 40% of the indicative volume of imported oil products for transit transportation.”
Upon further examination of the award, several key observations have emerged:
Volume Calculation and Proof of Loss:
It was noted that the volume claim presented by Oilcom was calculated by multiplying volume figures by turnover, without substantial proof of actual loss. This straightforward calculation raises concerns regarding the robustness and validity of the claimed damages.
Clarifications by Oilcom and Outturn Reports:
Oilcom, represented by Mr. Usamah Sheikh, provided testimony to the Arbitral Tribunal explaining that the volume figures were based on importation allocation and supported by “outturn reports.” These reports, jointly prepared by the Petroleum Bulk Procurement Agency (PBPA) and the appointed supplier’s surveyors, reflect the total discharge volume in Dar es Salaam under Oryx’s name. However, as clarified by the Tanzania Revenue Authority (TRA) customs, Oryx’s role is merely as a notified party, while the true ownership lies with the consignee.
Categorization of Imported Products:
Imported oil products fall under different categories:
Local Market: For Tanzania’s consumption.
Transit for Export: These products are meant for export to neighboring countries but may be localized for domestic use if necessary.
Types of Transit Product Sales:
FCA/Ex-tank: Customers transport the product themselves from Dar es Salaam, absolving the importer of transportation responsibility.
Transshipment (CIF/DAP): Customers provide their own barge or ship for product lifting.
Direct Delivery: Oryx organizes transportation to inland countries.
Discrepancies Highlighted by Oryx:
Oryx argued that the outturn reports did not accurately represent their transit operations and were not aligned with the contractual terms between Oryx and Oilcom.
Additionally, Oryx pointed out that, beyond inflated figures, the claim was premature. Under the framework agreement, Oryx retained the right to compensate for annual volume deficits over the entire contract period, which extends until 2032.
Chronology of the Claim:
On May 7, 2019, Oilcom notified Oryx of a claim amounting to US$ 5,087,078, calculated on the basis of 40% of listed customers but derived from turnover figures.
On January 5, 2021, Oilcom revised its calculation methodology, increasing the claim to US$ 131,602,238.
Despite Oryx’s challenge to the appointment of Prof. Mussa Assad and its request to stay the proceedings, the tribunal allowed Oilcom to amend its claim on March 3, 2023, to a staggering US$ 173,084,708. The substantial increase and timing of these revisions have raised questions about the legitimacy of the figures and the motives behind them.
These points underline the need for an in-depth review of the claim’s foundation and the impartiality of the arbitral process. Further analysis of additional elements in this case is underway, and more updates will follow as the situation evolves.
Stay informed for further insights into this developing story.
Upon further examination of the award, several key observations have emerged:
Volume Calculation and Proof of Loss:
It was noted that the volume claim presented by Oilcom was calculated by multiplying volume figures by turnover, without substantial proof of actual loss. This straightforward calculation raises concerns regarding the robustness and validity of the claimed damages.
Clarifications by Oilcom and Outturn Reports:
Oilcom, represented by Mr. Usamah Sheikh, provided testimony to the Arbitral Tribunal explaining that the volume figures were based on importation allocation and supported by “outturn reports.” These reports, jointly prepared by the Petroleum Bulk Procurement Agency (PBPA) and the appointed supplier’s surveyors, reflect the total discharge volume in Dar es Salaam under Oryx’s name. However, as clarified by the Tanzania Revenue Authority (TRA) customs, Oryx’s role is merely as a notified party, while the true ownership lies with the consignee.
Categorization of Imported Products:
Imported oil products fall under different categories:
Local Market: For Tanzania’s consumption.
Transit for Export: These products are meant for export to neighboring countries but may be localized for domestic use if necessary.
Types of Transit Product Sales:
FCA/Ex-tank: Customers transport the product themselves from Dar es Salaam, absolving the importer of transportation responsibility.
Transshipment (CIF/DAP): Customers provide their own barge or ship for product lifting.
Direct Delivery: Oryx organizes transportation to inland countries.
Discrepancies Highlighted by Oryx:
Oryx argued that the outturn reports did not accurately represent their transit operations and were not aligned with the contractual terms between Oryx and Oilcom.
Additionally, Oryx pointed out that, beyond inflated figures, the claim was premature. Under the framework agreement, Oryx retained the right to compensate for annual volume deficits over the entire contract period, which extends until 2032.
Chronology of the Claim:
On May 7, 2019, Oilcom notified Oryx of a claim amounting to US$ 5,087,078, calculated on the basis of 40% of listed customers but derived from turnover figures.
On January 5, 2021, Oilcom revised its calculation methodology, increasing the claim to US$ 131,602,238.
Despite Oryx’s challenge to the appointment of Prof. Mussa Assad and its request to stay the proceedings, the tribunal allowed Oilcom to amend its claim on March 3, 2023, to a staggering US$ 173,084,708. The substantial increase and timing of these revisions have raised questions about the legitimacy of the figures and the motives behind them.
These points underline the need for an in-depth review of the claim’s foundation and the impartiality of the arbitral process. Further analysis of additional elements in this case is underway, and more updates will follow as the situation evolves.
Stay informed for further insights into this developing story.
