JKX Oil seems to have won its court battle with the SPF over ownership of Poltava Petroleum
British investor JKX Oil and Gas PLC won a major legal battle April 5 when Ukraine’s High Arbitration Court upheld JKX’s claim to a 49 percent stake in Poltava Petroleum Company.
The court decision in JKX’s favor may have resulted, in part, from pointed criticism on the part of British Prime Minister Tony Blair, who last week expressed concern over the dispute in a closed letter to President Leonid Kuchma.
During a March 14 meeting, Poltava Petroleum’s other shareholder, the State Property Fund, excluded JP Kenny Exploration and Production Ltd., JKX’s wholly owned subsidiary, from the company. JP Kenny was one of the founders of the company. The shareholders meeting was initiated by the SPF, itself a 25 percent shareholder in the company. JKX’s representatives were not present at the shareholders meeting.
SPF officials defended the action, accusing the British investors of violating Ukrainian legislation and investment obligations.
At the shareholders meeting, JKX’s stake was transferred to privately owned Poltava-based Naftogaz- tekhnologia. JKX has alleged that Naftogaztekhnologia is owned by a group of offshore companies.
The SPF had refused to recognize the court ruling as of April 10.
“We have not yet received official notification of the ruling from the court,” SPF spokesperson Nina Bryliuk told the Post. “No decision on our future plans in this dispute will be made until we do.”
The court has not publicly announced its decision, but JKX officials made the decision public themselves.
“This decision gives a clear indication of the government of Ukraine’s commitment to uphold the rule of law and to respect Ukraine’s international treaty obligations. JKX believes that the resolution of these issues will allow it to resume its investment program for PPC, which should lead to increasing oil and gas production levels,” a JKX statement read.
About a week before the court decision, JKX issued a much different statement announcing plans to cut back operations in Ukraine and focus on other areas of the world.
JKX claims to be the biggest British investor in Ukraine, with 58 percent of its assets in Ukraine. The company also has licensed interests in Georgia, Italy, North America and on the Caspian Sea in Russia.
While JKX has won its battle to retain its original investment, its conflict with SPF officials over the company is not over.
The origin of the quarrel is rooted in a one-year battle for ownership of a 26 percent stake in Poltava Petroleum, which became available about three years ago due to liquidation of state-owned Potlavagazprom, one of the three original shareholders. The court April 5 postponed a ruling on the matter to a later date.
JKX wants the stake equally divided between itself and the SPF. The SPF maintains its rights as the state’s agent to the entire 26 percent stake.
The side that gets its way with the shake gets full control of the plant.
JKX is a publicly traded company on the London Stock Exchange. Naftogazukrainy, Ukraine’s state-owned oil and gas monopoly, is one of its shareholders with a 10 percent stake. A stake of almost the same size is owned by a company controlled by Bruce Rappaport, a Swiss banker with interests in a number of offshore zones. PPC was founded in 1994. JKX claims to have invested $100 million into PPC and claims investments by the SPF are less than $1 million.
