NJSC Naftogaz Ukrainy and its six subsidiaries on October 17, 2016 initiated arbitration proceedings against the Russian Federation with the requirement to reimburse for losses caused by the illegal seizure of the group's assets in Crimea, the press service of the state holding has told Interfax-Ukraine.

"Naftogaz has initiated proceedings in accordance with the agreement between the Cabinet of Ministers of Ukraine and the government of the Russian Federation on promotion and mutual protection of investments, better known as the Russian-Ukrainian bilateral investment agreement. Naftogaz preliminarily estimated the damage to the group at $2.6 billion," the report reads.

According to the state holding, the matter concerns the property of Naftogaz, Chornomornaftogaz, Ukrtransgaz, Ukrgazvydobuvannia, Ukrtransnafta, Gaz Ukrainy and Likvo.

"After the illegal invasion of Crimea and the occupation of the peninsula in 2014, the Russian Federation applied an ambitious and well-coordinated scheme of depriving Ukrainian companies of their property without paying compensation. In Crimea Naftogaz had several valuable energy assets, the seizure of which by the Russian side violates the bilateral investment agreement, which requires the Russian Federation to respect and protect Ukrainian assets, including those located in Crimea," the holding said.

Naftogaz earlier declared its plans to seek to regain control over its assets lost because of Russia's occupying Crimea and have all losses compensated for through international judicial institutions.

Naftogaz in February 2016 initiated a negotiating process regarding the loss of its assets in Crimea by formally notifying Russia of an investment dispute under the bilateral investment protection agreement.

According to Naftogaz's annual consolidated statement, the six-month negotiating period ended in August 2016. Thus, the negotiating process produced no results, which entitles Ukraine to start arbitration proceedings against Russia regarding the investment agreement.

Naftogaz contracted Covington & Burling LLP (New York, the United States) to protect its interests in the litigation concerning the lost Crimean assets.

Naftogaz Ukrainy is wholly owned by the Ukrainian Cabinet of Ministers and consolidates the country's largest oil and gas producing facilities. It holds a monopoly on the transportation and storage of natural gas in underground storage facilities and on the transportation of oil through pipelines across the country.