April 28, 2011 / 3:53 PM / 7 years ago

UPDATE 2-Sterling Resources declares force majeure on Romania offshore ops

* Says force majeure on Midia and Pelican Blocks

* Says lack of clarity on the applicable procedure

* Says reached an impasse with authorities

* CEO says onshore ops are unaffected

* Shares fall as much as 20 percent (Adds CEO comments in paragraph 4,5,7, details, share movement)

BANGALORE, April 28 (Reuters) - Canada’s Sterling Resources Ltd declared force majeure on two offshore oil blocks in Romania, citing a lack of clarity regarding issuance of construction permits, sending its shares down as much as 20 percent.

The energy company won the environmental and drilling permits for the Midia and Pelican blocks in the Black Sea earlier this year, but the project had not been able to obtain construction permits for certain offshore activities under the law passed in 2009 by the Romanian Parliament.

The Romanian authorities are “currently unable or unwilling to provide construction permits for offshore oil and gas activities,” the Calgary, Alberta-based company said in a statement.

“So, the main reason we are declaring force majeure is to state that we are in an impasse (with the Romanian authorities) and we cannot proceed for reasons outside of our control,” Chief Executive Mike Azancot told Reuters by phone.

Azancot said Sterling’s onshore operations in Romania were unaffected by either the permit issue or the force majeure -- a legal option to suspend operational activities due to factors beyond a company’s control.

Sterling plans to drill an oil-targeted well at Eugenia in the Pelican Block and possibly a well at Ioana in the gas-prone Midia Block, according to its website.

Its plans also include obtaining all necessary approvals to move forward with the development of the Ana and Doina gas discoveries to start commercial production within three years, Azancot said.

The company has notified the National Agency of Mineral Resources (NAMR) about its move and in 15 days NAMR must either agree or reject the invocation of force majeure.

NAMR’s rejection of force majeure may lead to international arbitration, said the company, which also has assets in the United Kingdom, France and the Netherlands.

Shares of the company were down 11 percent at $3.90 in late morning trade on the Toronto Venture Exchange. They slumped to as low as C$3.50 earlier in the session amid heavy trading. The stock has risen about 27 percent so far this year. (Reporting by Aftab Ahmed and Savio D‘Souza; Editing by David Holmes and Gopakumar Warrier)

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