Country Annuls Harken Oil Contract

March 4, 2005

THE Costa Rican governmentannounced Wednesday it had annulled aconcession contract that allowed HarkenCosta Rica Holdings, a subsidiary ofNorth American firm Harken Energy, toexplore and exploit oil in Costa Ricanwaters off the Caribbean province ofLimón.According to the resolution passed bythe government, the annulment was madebecause of a breach in contract. Harkenwas given a 20-year concession contract in1998 but failed to present the trimesterreports on the area and did not completethe required environmental-impact studies,according to the government. It also failedto renew a $300,000 compliance guarantee,which it was required to pay duringthe exploratory period.Environmentalist groups in the regionhave long criticized the contract, as haveresidents of the area who feared the projectwould aversely affect tourism. TheNational Technical Secretariat of theEnvironment Ministry (SETENA)declared the project non-viable in 2002because it would adversely affect theCaribbean’s natural ecosystem.A ruling by the ConstitutionalChamber of the Supreme Court last yearpaved the way for the government torescind Harken’s contract (TT, Oct. 15,2004).Harken Holdings has two months inwhich to appeal the decision.

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