Land in parts of the Former Soviet Union is being returned to people who owned it before the Soviet regime seized power.
Confusion over land rights is one of many potential traps for companies negotiating oil and gas projects.
The latest victim is likely to be one of two independents negotiating to develop oil and gas assets around the town of Poti, which lies on the Black Sea coast in Georgia.
Toward the end of last year, Ovoca Resources plc, Dublin, announced signing of a letter of intent to develop mineral resources around Poti. The deal was arranged with the patriarchate of Georgia (OGJ, Dec. 27, 1993, p. 32).
The patriarch of Georgia held vast tracts of Georgian land before the Soviet Union took power. Ovoca said this land was being returned to the patriarch's ownership, including all developments and infrastructure built by the Soviets.
RIGHTS CLAIM
Ovoca said it had been granted exclusive rights to "...cooperate with the patriarchate to improve and enhance certain assets owned and controlled by or potentially available to the patriarchate. These assets include certain oil fields, copper mines, existing and potential mineral reserves, and port facilities."
Now T. P. Geleishvili, chairman of Georgia's State Committee of Foreign Economic Relations, has dashed the hopes of Ovoca with a press statement issued in response to Ovoca's announcement.
"The government of the Republic of Georgia wishes to make it clear, whilst it welcomes any cooperation between Georgia and foreign investors, that the assets, particularly those relating to natural resources including oil and gas, are the property of the state and that it is the sole right of the state to allocate development and exploration rights to companies with regard to these assets."
COUNTERCLAIM
Geleishvili said state oil company Saknavtobi is the main body responsible for oil and gas in Georgia. And Saknavtobi has recently formed a joint venture with J. P. Kenny Exploration & Production Ltd., London, to develop oil and gas resources around Poti, Kartli, and the Georgian Black Sea.
Hamish Curran, operations manager at J. P. Kenny Expro, said reading Geleishvili's statement brought him peace of mind. As far as Curran is concerned, there is no issue over ownership of mineral rights.
"Ovoca believes that the patriarch is returning as landowner," Curran.said. "This may be the case, but ownership of land is a different matter to mineral rights.
"Was it Rockefeller who said, 'The meek shall inherit the earth but not the mineral rights'?"
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