The State Property Fund said on July 4 it was considering taking British oil explorer JKX Oil and Gas PLC to the nation’s highest court to settle a dispute over ownership rights to a Ukrainian producer.
Serhy Hlushko, deputy head of the SPF, said the fund would insist on ousting JKX from the shareholders in Ukrainian oil and gas producer Poltava Petroleum Company and alleged that the British company had violated the law and failed to meet its investment obligations.
In April JKX won a victory when the High Arbitration Court ruled that SPF did not have the right to expropriate its investment in the now-profitable Poltava.
The SPF appeal was quashed on June 25, JKX Chief Executive Paul Davies told Reuters.
Then on June 27 the court confirmed JKX’s increased stake in PPC to 66 percent from 49 percent, Davies said.
At the same time, the SPF’s stake in Poltava Petroleum was boosted to 33.8 percent from 25 percent after the court redistributed a 26 percent stake which belonged to a bankrupt company.
“It’s something that I am not aware of,” Davies said, referring to the State Property Fund’s intention to apparently appeal against the June 27 decision.
“If they want to appeal, fine,” Davies said. “I wouldn’t be surprised if they tried. It seems to be more a matter of form rather than content.”
“We’re very pleased with the outcome. It has sent a very positive message not only to us and our shareholders but to the western investment community that the court system, in this case, upheld the law.”
Hlusko said the fund, which oversees Ukraine’s privatization and manages state stakes in companies, believed it was in the right. He said the SPF would question the court decision and was considering an appeal to the Constitutional Court.
JKX, which has 58 percent of its assets in Ukraine and says it is the biggest British investor in the country, has wrangled with the SPF for months over the fund’s attempts to oust the company from Poltava Petroleum Company.
The case has been closely watched by foreign investors and British Prime Minister Tony Blair has written to Ukraine’s President Leonid Kuchma expressing concern over the case.
JKX says it has invested $100 million in modernizing PPC, which was set up in 1994, and make it profitable.
