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One of the most aggressive buyers of North Sea oil and gas operations has defeated allegations he stripped millions of dollars of assets from a joint venture that later collapsed.
The claims against Francesco Mazzagatti, chief executive of Viaro Energy, had been brought in England’s High Court by Taqa, Abu Dhabi’s national energy company, and the UK’s Spirit Energy.
It is a significant victory for Viaro, a privately held company that has acquired interests in about 15 oilfields in the UK North Sea, the Atlantic Ocean west of Shetland and off the Netherlands over the past five years.
The company has focused on eking out the remaining reserves from fields in the territory, which are growing exhausted and harder to exploit.
Taqa and Spirit claimed that Viaro deliberately removed the value from their joint venture in the North Sea’s Brae oil and gasfields by declaring an $84mn dividend from an operating company known as UKCS8. The dividend was in favour of a parent controlled by Viaro.
The case pitted the national oil companies of two of the seven emirates in the United Arab Emirates against each other. One of the defendants in the case alongside Viaro was Fujairah Oil and Gas, national oil company of the emirate of Fujairah, to which Viaro sold its Brae assets.
UKCS8 subsequently collapsed into insolvency, having defaulted on at least £35mn in payments to creditors.
The declared dividend cancelled out an identical sum due to be paid from the parent to the operating company, meaning no cash changed hands.
In a judgment delivered on Friday, Mrs Justice Dias dismissed all of Taqa’s and Spirit’s allegations. She wrote she was “unable to accept” claims that declaration of the dividend was a “last desperate throw of the dice” to “dump” UKCS8 having first extracted all of its assets.
The court heard that Taqa and Viaro had been at loggerheads over the future of the Brae assets, with Taqa eager to end production and Viaro keen to invest and continue with production.
Matters came to a head because in late 2020 UKCS8 needed to put up £110mn in security under its Decommissioning Security Agreement (DSA), a mechanism meant to secure funds to decommission oil and gasfields.
Viaro had argued that it could not immediately put up the security and sold UKCS8 to Fujairah Oil and Gas (FIOGC) so that the UAE company could use its credit rating as a state-owned company to provide the necessary guarantee.
“On my assessment of the witness and documentary evidence, I find and hold that the sale to FIOGC was agreed for a legitimate commercial purpose, namely, to break the deadlock with Taqa and to enable the provision of the required DSA security,” the judge wrote.
The dividend was a “necessary adjunct” to the sale, she added.
Mazzagatti said after Friday’s judgment that he was “very pleased” with the outcome.
“Today the High Court has given a very strong judgment in our favour, which categorically dismisses all of the Taqa and Spirit claims,” he said.
Taqa meanwhile said it remained confident of the reasons that its UK subsidiary, Taqa Bratani, brought the claims.
“In consultation with its legal teams, Taqa Bratani will be carefully considering the next steps it wishes to pursue, which includes whether any appeals will be applied for,” it said.
Separately, a case lodged in the High Court in November claimed Mazzagatti forged board documents to steal at least €143.8mn from his former company, Singapore’s Alliance Petrochemical and Investment.
The claim alleged that he used at least part of the misappropriated money to buy RockRose Energy, owner of the Brae assets. Mazzagatti and Francesco Dixit Dominus, Viaro’s finance director, deny those claims.
