HONG KONG (XFN-ASIA) – ConocoPhillips has asked for arbitration in a dispute with China National Offshore Oil Corp (CNOOC) over costs incurred because of Beijing’s windfall tax on oil sales, the Wall Street Journal reported, citing people familiar with the situation.
Under a rule introduced in March 2006, companies that produce oil, both onshore and offshore, to be sold in China are subject to a special tax of 20-40 pct on the portion of the price that is above 40 usd a barrel.
The report was not clear on the arguments put forward by ConocoPhillips in asking for arbitration, but said that under a production contract CNOOC and its foreign partners must agree to amend the contract terms to maintain the foreign partners’ ‘normal economic benefits’ if they are affected by the introduction of a new law.
The report cited a source as saying that ConocoPhillips has activated a clause in its contract with CNOOC that allows its dispute to be heard at the Arbitration Institute of the Stockholm Chamber of Commerce in Sweden.
A spokesman for ConocoPhillips declined to comment when asked whether his company had requested arbitration with CNOOC, tit said.
CNOOC is the parent of Hong Kong-listed CNOOC Ltd.