The State Property Fund has abandoned its quest to wrest control of oil firm from nation's largest U.K. investor.
e British firm that was an early joint venture partner in the company.
The fund’s decision to sell its minority 33 percent stake in the small but lucrative oil and gas firm opens the door for Britain’s JKX Oil and Gas to snap up the shares and effectively take complete control of the company.
“We have made a decision to sell the government’s share in the company, and JKX has already expressed interest in buying out the share package,” SPF Deputy Chief Serhy Hlushko told the Post on Oct. 4. “There is no point in fighting to control the plant anymore.”
Hlushko said the stake is currently being appraised and prepared for sale. He also said JKX filed an application with the SPF expressing interest in purchasing the stake.
Poltava Petroleum was founded as a joint venture between the SPF, JP Kenny Exploration and Production Ltd., and Poltavagazprom in 1994. JP Kenny is a wholly owned subsidiary of JKX. After the state‑owned Poltavagazprom was liquidated in 1998, the courts were left to decide what should become of the company’s 26 percent interest in Poltava Petroleum, touching off a seesaw legal battle for control of the oil company.
JKX, which originally owned a 49 percent stake in Poltava Petroleum, had maintained that the liquidated company’s share should be equally divided between itself and the SPF – yielding it a majority stake. The SPF argued that it should inherit the entire stake on the grounds that the liquidated founder was state‑owned.
The conflict escalated. Last year, the SPF sought to deprive JKX of its entire stake in Poltava Petroleum. Alleging that the British investor had not lived up to its investment agreement, the fund tried to have JKX removed from the list of the joint venture’s founders altogether. That action spurred another round of lawsuits, and provoked British Prime Minister Tony Blair to write President Leonid Kuchma about the matter.
It wasn’t until the Supreme Court ruled in JKX’s favor on June 27, recognizing it as owner of a 62 percent holding in the venture, that the SPF decided to throw in the towel.
“We can’t appeal this ruling – it’s the highest court,” Hlushko said. “The 33 percent stake is a small holding and doesn’t give us any control over the operations of the company.”
“We had our own vision of how the shares should have been divided,” he said. “We defended this position for more than a year, but we have lost once and for all following this ruling by the Supreme Court.”
Throughout the case, Poltava Petroleum’s managers have remained loyal to the British investor.
It appears that both Poltava Petroleum managers and representatives of JKX have chosen to keep a low profile until the shares currently held by the fund are transferred to JKX – or purchased by another bidder.
Neither would respond to the Post’s request for an interview on the subject.
“All I can say is that we are aware of the SPF’s statements,” a JKX spokesperson told the Post. Poltava Petroleum General Director Timothy Kaunov did not respond to the Post’s questions either.
JKX, which is publicly traded on the London Stock Exchange, has most of its assets in Ukraine and claims to be the country’s largest British investor. Though Poltava Petroleum extracts only a small portion of the nation’s oil and gas, it does operate in the black, with profits in excess of $10 million last year.
