45
experienced a surge in violence and, as a result, certain other international oil and gas companies have decided to
withdraw foreign staff. For example, in February 2014 the Group’s production in Block 43 in Yemen was suspended due
to export pipeline sabotage, and development work was suspended for security reasons. Collection of 3D seismic data in
Block 82 has also been suspended for security reasons. Additionally, in May 2014, Yemen’s main oil export pipeline
was sabotaged by tribesmen, the latest of several attacks on pipelines. The Group may be required to similarly curtail its
activities in Yemen in the future, creating the risk that the Group may fail to fulfil certain of its exploration and appraisal
commitments under its licences in Yemen, including required levels of seismic analysis, exploratory and appraisal
drilling and development of identified fields. If the Group fails to fulfil certain of its licence commitments, for example
as a result of a deterioration in the security situation, it may lose one or more of its existing licences in Yemen. If the
Group’s relationships with local residents in the areas where its assets are located were to deteriorate, the Group may be
required to temporarily or permanently cease all operations in the country.
If the Group is unable to resume full operations in Yemen, or negotiate modified terms, it may experience an adverse
effect on its business, prospects and financial condition.
In addition, the Block 5 licence will expire 8 June 2015, but as a result of lost production days due to the security
situation in Yemen, the Group is seeking to extend the Block 5 commitment period for 541 days (until 1 December
2016), according to the terms of the licence. Although discussions are ongoing with the Yemeni government, the Group
is still awaiting a final determination. If the Group is unable to obtain an extension of the commitment period from the
Yemeni government, the Group will lose a year or more of anticipated production from Block 5, and may also be
required to surrender its license in respect of Block 5 and recognise an impairment charge on the value of its JHOC
acquisition.
There is significant uncertainty in the legal systems in certain jurisdictions in which the Group operates.
Certain of the jurisdictions in which the Group has interests have less developed legal systems than more established
economies which could result in risks such as:
a higher degree of discretion and corruption on the part of governmental authorities;
ineffective legal redress in the courts of such jurisdictions, whether in respect of a breach of law or regulation,
or in an ownership dispute;
a lack of judicial or administrative guidance on interpreting applicable local rules and regulations;
inconsistencies or conflicts between and within various laws, regulations, decrees, orders, resolutions and
judgments; or
relative inexperience of the judiciary and courts in such matters.
Furthermore, in certain of these jurisdictions and in particular in Iraq, there is currently no legal regime regulating oil and
gas exploration, appraisal, development, or other activities which the Group may undertake. As a result, the Group may
be unable to reliably establish, protect or defend legal rights or title to assets (and, in particular rights to explore for,
develop and produce oil and gas) in the jurisdictions in which the Group operates and proposes to operate. See “
—Risks
relating to the Group—The Group’s ability to operate depends on its ability to obtain, retain or renew required drilling
rights, licences, concessions, permits and other authorisations necessary for its operations, many of which are subject to
change, and certain formalities of which may not always be satisfied
.”
The Group may fail to comply with various anti-corruption and anti-bribery laws and regulations and with
international sanctions regimes.
Doing business in the jurisdictions in which the Group operates brings with it inherent risks associated with fraud,
bribery and corruption. In addition, the oil and gas industries have historically been shown to be often vulnerable to
corrupt or unethical practices. As a result, the Group is subject to various anti-corruption and anti-bribery laws and
regulations which generally prohibit companies and their intermediaries from making improper payments to foreign
officials for the purpose of obtaining or keeping business and/or other benefits. There is a risk that the Group, by its
policy of refusing to engage in bribery or corruption as a matter of policy, could be at a commercial disadvantage and
may fail to secure contracts or new business opportunities within certain jurisdictions.
The Group could be affected by sanctions regimes established by, among other authorities, the European Union, the
Office of Foreign Assets Control of the US Department of the Treasury, the US Department of State (including the Iran
Sanctions Act and CISADA) and the United Nations Security Council (collectively, “
International Economic
