In a notable legal victory, Francesco Mazzagatti, the CEO of Viaro Energy, has been cleared of accusations related to asset misappropriation from a failed joint venture in the North Sea. The claims were made by Taqa, the state-owned energy firm of Abu Dhabi, and the UK’s Spirit Energy in the High Court of England.
This decision marks a significant success for Viaro, which has invested heavily in around 15 North Sea oilfields, as well as areas in the Atlantic Ocean and the Netherlands over the last five years. The company focuses on maximizing the remaining resources in aging oilfields, which face challenges due to dwindling reserves.
Taqa and Spirit alleged that Viaro had sought to diminish the value of their joint venture in the Brae oil and gasfields. They specifically cited a $84 million dividend declared from an operating company named UKCS8, which was awarded to a parent company controlled by Viaro, claiming it removed value from their partnership.
The dispute brought together two national oil companies from different emirates of the UAE, with Fujairah Oil and Gas also involved as it purchased Viaro’s assets in the Brae fields. After declaring insolvency, UKCS8 was unable to repay at least £35 million owed to creditors.
The court found that the dividend was balanced by an identical sum owed to UKCS8, meaning no actual cash exchange took place. In her ruling, Judge Dias rejected the accusations from Taqa and Spirit, stating that she could not accept the claim that the dividend declaration was merely a last-ditch effort to strip UKCS8 of its assets.
The tensions between Taqa and Viaro regarding the future management of the Brae assets had escalated when UKCS8 was required to secure £110 million under a Decommissioning Security Agreement. Viaro explained that to resolve the impasse with Taqa, they sold UKCS8 to Fujairah Oil and Gas, which could use its government backing to provide necessary security.
Judge Dias concluded that the sale aimed to resolve the deadlock and that the dividend was an essential part of this transaction. Mazzagatti expressed satisfaction with the court’s ruling, which he found to be a strong affirmation of Viaro’s position.
While pleased with the verdict, Taqa noted it would reconsider its legal options, including the potential for an appeal. Additionally, Mazzagatti faces other legal challenges, including allegations of document forgery and embezzlement from his previous firm in Singapore. However, he and Viaro’s finance director have denied these claims.