The UK’s Gulf Keystone has started legal proceedings against its consortium partner in the Hassi Bu Hamou (HBH) oil and gas permit in Algeria as it attempts to exit the partnership.

Gulf Keystone decided to sell off its Algerian interests in July 2009, saying at the time that it needed permission from its partners in the Hassi Bu Hamou permit – BG and Algerian energy giant Sonatrach – to exit the deal.

The company wants to leave its Algerian operations to concentrate on its exploration and production assets in Iraq’s Kurdistan region.

According to a second report issued by Gulf Keystone on 20 July, BG was considering forcing the former company to forfeit its rights to the permit. The company estimated its potential losses at $7.5m

The company now says it has started a legal defence. “Arbitration proceedings have been commenced against BG,” according to a company half-year report issued on 29 September. It would also not develop its concessions at the Ben Guecha field in southwest Algeria and expected its licence to lapse.