PetroKazakhstan Dispute with Lukoil
14 April 2005 - 4:00PM
PR Newswire (US)
PetroKazakhstan Dispute with Lukoil CALGARY, April 14
/PRNewswire-FirstCall/ -- PetroKazakhstan Inc. (the "Company")
announces that it has reviewed the Press Release issued by Lukoil
Overseas Holding Ltd. on April 13th 2005 and has now received a
copy of the Request for Arbitration filed with the Arbitration
Institute of the Stockholm Chamber of Commerce by Lukoil Overseas
Kumkol BV and Turgai Petroleum against PetroKazakhstan. Lukoil
Overseas Holding Ltd, a company registered in the British Virgin
Islands, is managed and controlled by Lukoil, a company
incorporated in Russia and owns through a series of offshore
subsidiaries, 100% of Lukoil Overseas Kumkol BV, a company
registered in the Netherlands (together "Lukoil"). Turgai Petroleum
is itself owned 50/50 by PetroKazakhstan and Lukoil Overseas Kumkol
BV and is the license holder on the Kumkol North field.
PetroKazakhstan Kumkol Resources ("PKKR") is the operating
subsidiary of PetroKazakhstan in Kazakhstan, is registered in
Kazakhstan and is the license holder of the Kumkol South field.
Kumkol North and Kumkol South are contiguous and were covered by a
single license until the formation of the Turgai Petroleum joint
venture in 1995. PetroKazakhstan considers that Lukoil has breached
the confidentiality provisions of the Turgai Petroleum
Shareholders' Agreement by repeatedly disclosing publicly its
version of its ongoing disputes with PetroKazakhstan regarding the
operations of Turgai Petroleum. PetroKazakhstan believes that as a
result of Lukoil's Press Release and in compliance with applicable
security regulations and notwithstanding the confidentiality
provisions of the Shareholders' Agreement, it is obliged to provide
to its shareholders the following additional information regarding
ongoing litigation with Lukoil. On July 6, 2004, PetroKazakhstan
filed a Request for Arbitration with the Arbitration Institute of
the Stockholm Chamber of Commerce against Lukoil seeking
compensation for lost profits which PetroKazakhstan would have
received as a 50% shareholder of Turgai Petroleum but for Lukoil's
failure to finance the joint venture as provided under the
Foundation Agreements of the Joint Venture and for Lukoil's actions
in violation of corporate governance obligations and tender
approval requirements. Preliminary amount of the damage claims by
PetroKazakhstan indicated to the Arbitration Institute was $200
million. Under the agreed schedule of arbitration proceedings,
PetroKazakhstan is due to file its final statement of claim by
April 22, 2005 and Lukoil is due to respond by June 30, 2005. On
July 21, 2004, PetroKazakhstan Kumkol Resources (PKKR) filed a
claim in the District Court of Amsterdam against Lukoil for damages
suffered by PKKR as a result of unlawful actions by the Lukoil
related to the shut-in of certain wells located at the border of
the Kumkol North and the Kumkol South fields. The preliminary
amount of the claim, as at the date of the filing, was an initial
$65 million. This amount increases daily as the production of
Kumkol South continues to be partly constrained. The Company
believes that the recent Lukoil request for Arbitration is a
retaliatory response to the initial PetroKazakhstan legal actions
filed in July 2004. PetroKazakhstan Inc. is a vertically
integrated, international energy company, celebrating its eighth
year of operations in the Republic of Kazakhstan. It is engaged in
the acquisition, exploration, development and production of oil and
gas, refining of oil and the sale of oil and refined products.
PetroKazakhstan shares trade in the United States on the New York
Stock Exchange, in Canada on The Toronto Stock Exchange, in the
United Kingdom on the London Stock Exchange and in Germany on the
Frankfurt Exchange under the symbol PKZ. As of December 27, 2004,
PetroKazakhstan shares began trading on the Kazakhstan exchange
under the symbol CA_PKZ. The Company's website can be accessed at
http://www.petrokazakhstan.com/. The Toronto Stock Exchange has
neither approved nor disapproved the information contained herein.
DATASOURCE: PetroKazakhstan Inc. CONTACT: Ihor P. Wasylkiw, Vice
President Investor Relations, (403) 221-8658, (403) 383-2234
(cell); Jeffrey D. Auld, Vice President, Treasurer, + 44 (1753)
410-020, + 44 79-00-891-538 (cell)
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