14:05 16.02.2015

JKX Oil & Gas files claim worth $180 mln against Ukraine

2 min read
JKX Oil & Gas files claim worth $180 mln against Ukraine

JKX Oil & Gas Plc with assets in Ukraine and Russia and its wholly owned Ukrainian and Dutch subsidiaries have commenced arbitration proceedings against Ukraine under the Energy Charter Treaty, the bilateral investment treaty between the United Kingdom and Ukraine and the bilateral investment treaty between the Netherlands and Ukraine.

In particular, JKX is seeking repayment of more than $180 million in rental fees that its Ukrainian subsidiary has paid on production of oil and gas in Ukraine since 2011.

"In these proceedings, JKX is seeking compensation for the losses it has suffered from Ukraine's treaty violations, including Ukraine's failure to treat JKX's investments in a "fair and equitable" manner and failing to comply with commitments made by Ukraine in respect of JKX's investments," reads a company report posted on the London Stock Exchange (LSE) on Monday.

The company said that in support of JKX's claims against Ukraine under the Energy Charter Treaty, an Emergency Arbitrator appointed under the Arbitration Rules of the Stockholm Chamber of Commerce has already issued an Emergency Award on 14 January 2015 ordering Ukraine to refrain from imposing royalties on the production of gas by JKX's Ukrainian subsidiary in excess of the rate of 28% (as opposed to the 55% rate that is currently applicable under Ukrainian law).

"The Emergency Award is binding on Ukraine under international law; however, if Ukraine refuses to comply with the Award, JKX will seek to have it recognised and enforced by the Ukrainian courts. In addition, JKX will seek orders from the Tribunal constituted under the Energy Charter Treaty to compel Ukraine to comply with the Award," reads the report.

As reported, in 2014 the Ukrainian parliament temporarily increased royalty for extraction of gas from 28% to 55% (from depths less than five kilometers) and then the parliament prolonged the requirement for 2015.

JKX Oil & Gas owns Poltava Petroleum Company. The company holds four licenses to develop oil and gas fields that are part of the Novomykolaivsky complex in Poltava region. It also has three exploration permits: for the Zaplavske, Yelyzavetivske and Chervonoyarsko-Skhidne fields. JKX Oil & Gas plc also operates in Russia, Hungary, Bulgaria and Slovakia.

The company's largest stockholders are Ihor Kolomoisky and Hennadiy Boholiubov's Eclairs Group with a 27.5% stake in JKX and Oleksandr Zhukov's Glengary Overseas Ltd. with 11.45%.

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