Tatneft Claims $1bn from Ukraine
Tatneft has initiated international legal proceedings against Ukraine, claiming $1.13 billion from it in compensation for the loss of control over Ukrtatnafta. Three more parties of the conflict will file similar suits in the near term to materially increase the claimed amount. The analysts are skeptical about this initiative of Tatneft, reasoning that if the company is finally upheld by the arbitration, it will hardly be able to confirm the verdict in Ukraine.
Tatneft filed to Ukrainian authorities yesterday the claim for the indemnification of damage caused to it as the holder of Ukrtatnafta. The amount is estimated at $1.13 billion, including mostly the damage resulted from the loss of control over Kremenchug refinery and payment defaults for supplied oil (estimated at roughly $520 million), a source with Tatneft specified.
Ukrtatnafta was set up based on the assets of Kremenchug refinery of the annual capacity of up to 18.6 million tons of oil. Tatarstan controlled 28.77 percent in the venture, Tatneft had 8.61 percent, Swiss Amruz Trading – 8.34 percent and SeaGroup International, the U.S., - 9.96 percent. In May of 2007, all stocks owned by nonresidents were written off in favor of the government-controlled NAK Naftogaz that extended its ownership from 43.054 percent to 61.35 percent.
The lawsuit of Tatneft is based on Ukraine’s violation of the intergovernmental agreement on encouragement and protection of investments. Russia and Ukraine inked that document far back in 1998. Tatneft is consulted by Cleary, Gottlieb, Steen & Hamilton. The suit was filed in conformity with UNCITRAL and Zurich will be the venue of the trial, a source with Tatneft said. As the lawyers recommended lodging separate suits to all affected parties, Tatarstan, SeaGroup International and Amruz Trading may follow Tatneft’s example in the near term. The source declined to give the overall amount, specifying, however, that it is very big but less than $5 billion.
“I think Ukraine will win, as we have the internal court judgements on the issue,” Ukrainian Prime Minister Yulia Tymoshenko declared, making clear that she regards the claim completely hopeless.
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All the Article in Russian as of May 22, 2008
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