News 2024

LUKOIL

LUKOIL started arbitration proceedings in London against Chinese Sinopec about causing significant damage, as the Russian company informed. Sinopec refused to make transaction on purchase of 50% of Caspian Investment Resources Ltd., which has stakes in four projects for hydrocarbons production in Kazakhstan. 

The total amount of the transaction is $1.2 billion. The signing the sales agreement was announced on April 15, 2014. "Sinopec refused to complete the transaction, and LUKOIL considers this as a breach of the agreement. LUKOIL started arbitration proceedings in London against Chinese Sinopec about causing significant damage,” - LUKOIL stated. 

Sinopec already owns 50% of Caspian Investment Resources Ltd. LUKOIL does not comment on the amount of the damage and does not provide other comments. Meanwhile, in the GAAP statements for the first quarter of 2014, LUKOIL reflected the loss on the scheduled sale of stake in Caspian Investment Resources Ltd. in the amount of $358 million. 

Completion of the transaction was expected before the end of 2014. When publishing the sales agreement, LUKOIL reported that the price is subject to a number of adjustments as of the date of completion of the transaction, and the transaction itself was required to obtain approval of the government bodies of Kazakhstan. 

History of Caspian Investments Resources partnership began in 2006, when founder of the world's largest metallurgical empire, Indian billionaire Lakshmi Mittal, decided to develop his oil business and bought a 50% stake in Russian company LUKOIL. In 2010, Mittal Investments sold its share to the Chinese company Sinopec, after LUKOIL refused to buy a partner share upon the pre-emptive right. Caspian Investment Resources Ltd. through a number of joint ventures owns various participating interests in 4 hydrocarbon production projects in Kazakhstan.

Alibekmola and Kozhasai (on a parity basis with Kazakhstan’s KazMunaiGas), Northern Buzachi (50% in CNPC) and Arman (50% in Shell) and 100% in the project of Karakuduk field development. In 2013, share of LUKOIL in commercial hydrocarbon production under these projects amounted to 10.2 million barrels of oil equivalent.