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Economy

Moroccan Oil Refinery Saga: Kingdom Refutes Billion-Dollar Claim in International Arbitration

Tuesday 09 July 2024 - 09:00

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In a significant development in the ongoing saga of Morocco's sole oil refinery, the North African kingdom has decisively rejected a substantial $2.7 billion compensation claim brought forth by Saudi entrepreneur Mohammed Al Amoudi. This rejection comes on the heels of a concluded arbitration procedure at the International Centre for Settlement of Investment Disputes (ICSID), an arm of the World Bank.

The dispute, which has drawn international attention, revolves around the liquidation of Samir, Morocco's only oil refinery. The facility, once a cornerstone of the nation's energy infrastructure, succumbed to financial collapse in 2015 under the weight of overwhelming debt.

Al Amoudi's Corral Morocco Holding, a subsidiary of his Swedish conglomerate, initiated the arbitration process, seeking the multi-billion dollar damages. The claim alleged violations of protections granted under the 1990 bilateral investment treaty between Sweden and Morocco. However, Moroccan authorities have vehemently dismissed these assertions, counter-accusing Al Amoudi of resorting to blackmail and employing illegal tactics to impede the refinery's liquidation process.

The financial quagmire of Samir stretches back nearly a decade, with the refinery accumulating a staggering debt of approximately 40 billion dirhams ($4 billion). This substantial sum is divided among various creditors, with 40% owed to the Moroccan state through its Customs Administration. The remainder is spread across a consortium of Moroccan and international banking institutions, with Banque Populaire alone holding a 2 billion dirham ($200 million) stake in the debt.

In a previous ruling, the Casablanca commercial court had implicated Al Amoudi and Samir's former management in the financial debacle, subsequently extending the judicial liquidation of the refinery. Operations at the facility ground to a halt in 2016, and since then, it has been operating under strict judicial oversight. A court-appointed trustee and a supervisory judge have been overseeing the limited activities that continue at the site.

Morocco maintains its stance that Al Amoudi and the previous management of Samir bear the responsibility for the refinery's financial downfall. This position has been a cornerstone of the kingdom's defense throughout the arbitration process.

The conclusion of the ICSID arbitration, conducted in accordance with its established regulations, may not mark the end of this complex legal battle. Industry analysts suggest that Morocco's rejection of Al Amoudi's claims could potentially pave the way for a full-scale trial, further prolonging this already protracted dispute.

As this high-stakes conflict unfolds, it continues to captivate the attention of energy sector observers and legal experts alike. The outcome of this case could have far-reaching implications for international investment agreements and the resolution of cross-border commercial disputes in the region.

The Samir refinery case stands as a stark reminder of the intricate challenges faced in managing large-scale industrial assets in an ever-evolving global economic landscape. As Morocco navigates these turbulent legal waters, the international community watches with keen interest, awaiting the next chapter in this complex narrative of industrial decline, financial intrigue, and diplomatic tension.