Gambia closed out talks with African Petroleum Corp to extend its exploration of offshore oil blocks and opened up for new bidders, according to a senior government official.
The Oslo-based company failed severally in meeting their commitments, prompting the decline, said Energy Permanent Secretary, Mod K. Ceesay.
Senegal also canceled one of two contracts held by African Petroleum because the firm had not fulfilled its commitments.
African Petroleum’s stock price fell by 57 percent following Gambia’s government decline to have their exploration bid extended.
The company has temporarily suspended trading, Reuters reported. Shares in African Petroleum were down 24.63 percent.
African Petroleum was in talks with the administration of Yahya Jammeh to prolong its exploration period, which expired in September 2016.
But Jammeh was defeated in the polls in December and his opposition rival Adama Barrow took power following a political standoff.
Barrow’s administration is doing away with most of Jammeh’s deals, which have been regarded as “shady.”
Africa Petroleum’s chief executive met with Barrow but Ceesay says “there are no ongoing negotiations.”
Tensions may erupt while Gambia is still struggling to negotiate out of court illegal contract terminations costing tens of millions of dollars by Jammeh’s government.
African Petroleum insists its licenses remain active until the West African nation’s government enact a termination procedure.
It made similar claims in Senegal where exploration rights have been given to Total.
The company said it has invested $64 million in The Gambia but did not meet the requirements to drill the wells within the agreed timeframe.
The two oil blocks in Gambia are estimated to have at least three billion barrels of oil, a fortune that can turn around the impoverished nation’s fortune.
Gambia’s economy is highly dependent on peanut export, tourism, and remittances from the Diaspora.
Direct control of key businesses, including oil by ex-President Jammeh and his jailing of businessmen scared investors.
Barrow’s government has shown an open door policy in its push to attract investors and create jobs, but it says it will review terms of contracts signed by Jammeh’s regime.