SK Innovation said Sunday it is considering initiating international arbitration proceedings against the Peruvian government for blocking the company’s exit from Camisea Gas Project in Peru.

The South Korean battery-to-petrochemical giant inked a deal with Pluspetrol in September 2019 to sell its 17.6 percent stake in two Camisea gas fields in the Cusco region of Peru to the Argentine firm for $1.05 billion.

However, the Peruvian government still hasn’t endorsed the transaction, though SK Innovation has fulfilled all legal requirements for the approval, according to the company.

“The Peruvian government is withholding the approval to make certain amendments to the Camisea License Agreements with the remaining consortium members that are unrelated to SK’s exit and which SK has no authority to negotiate. This conduct by the Peruvian government is contrary to international law, including the Korea-Peru Free Trade Agreement,” a company official said.

Once the transaction is complete, SK Innovation aims to focus investments on innovative and carbon-neutral technologies and energy sources, including next generation batteries.

“SK is facing the threat of significant and irreparable financial damage and must protect its rights. We are confident a satisfactory solution can be reached in the coming weeks that would obviate the need for arbitration and preserve Peru’s reputation as an upstanding trade and investment partner that respects the rights of companies that play by the rules,” stated Choi Woo-hyuk, general manager of SK Innovation Sucursal Peruana.

By Kim Byung-wook (kbw@heraldcorp.com)