Energy for Alaska

Luxembourg, 28 March 2017 The Deutsche Oel & Gas Group has reached an out-of-court settlement with U.S. Customs and Border Protection (CBP) in relation to an alleged violation of the Jones Act.

This settlement brings to an end a dispute that has been ongoing since October 2011 between CBP and Furie Operating Alaska, LLC (FOA), a U.S. subsidiary of the Deutsche Oel & Gas Group.

Under the settlement, FOA will pay a total of USD 10 million to CBP. It can make these pay-ments according to a set schedule up until 2025; unscheduled payments are possible. CBP had originally demanded USD 15 million; FOA had appealed against this. The provisions recognised by Deutsche Oel & Gas Group in its balance sheet will now be released to cover the settlement amount. The settlement is taking place without any acknowledgement of guilt on the part of FOA or CBP.

CBP claimed that FOA had violated the Coastwise Merchandise Statute – generally referred to as the Jones Act – in 2011, because it transported a drilling platform from one U.S. port to another on a non-American vessel. Under the Jones Act, however, this is only permitted for ships sailing under the U.S. flag. FOA appealed against this claim before the U.S. District Court for the District of Alaska. FOA put it to the court that no sufficiently large ship under the U.S flag had been available. For this reason and based on the assessments of other U.S. authorities, FOA had assumed an exception would be made.

The agreement reached provides for yearly payments of USD 1 million from 2017 to 2020. From 2021 to 2024 payments of USD 1.25 million, plus 0.56% interest, will be due. The final instalment of USD 1 million, plus 0.56% interest, will be payable in 2025.

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