Australia's AED in administration
Melbourne-based AED Oil has called in the administrators as a result of its troubled activities in the Puffin Oil Field.
AED finally admitted defeat after an international arbitration panel found in favour of Sea Production, the Norwegian-based owner of the Puffin's field's production and storage platform.
The Puffin operation became a joint venture between AED Oil and China's Sinopec in 2008, when the Australian company sold 60% of its stake in the Timor Sea oilfield to the Chinese oil giant for US$561m. However, one year later, operations were suspended after safety allegations were made against Sea Production who then sued for US$60m compensation.
With the arbitration panel recently ruling in Sea Production's favour, requiring AED Oil to make a "substantial payment", AED called in administrators KPMG. However, the decision was not only a result of the compensation claim. The Puffin field, China's only Australian production investment, had been struggling to meet its output expectations for some years, with AED claiming the problems lay with the well rather than the overall field.
AED's woes provides further ammunition for critics of China's overseas investment strategy in hydrocarbon activities, as recently reported in the OATS LRC.
