PetroKazakhstan responds to Antimonopoly Allegations
04 Avril 2005 - 4:26PM
PR Newswire (US)
PetroKazakhstan responds to Antimonopoly Allegations CALGARY, April
4 /PRNewswire-FirstCall/ -- PetroKazakhstan Inc. (the "Company")
has reviewed a press release issued today in Kazakhstan by the
Republic of Kazakhstan's "Agency for the struggle with Economic and
Corruption Crimes (Financial Police)." The Financial Police
announcement states that, under its preliminary investigation, two
officials of the Company's Kazakhstan subsidiaries, Mr. Thomas P.
Dvorak, President of AO "PetroKazakhstan Kumkol Resources" ("PKKR")
and TOO "PetroKazakhstan Oil Products" ("PKOP") and Mr. Clayton
Clift, Chief Financial Officer for PKKR and PKOP, have been charged
with the commission of criminal violations of Article 196 of
Kazakhstan's criminal code, which relates to violations of
Kazakhstan's antimonopoly legislation. The Financial Police alleges
that, in violation of Kazakhstan's antimonopoly legislation, a
number of group distribution companies (LLPs) were organized,
replacing the previous regional branches of PKOP, for the purpose
of avoiding price ceilings established by Kazakhstan's Agency for
Regulation of Natural Monopolies and Protection of Competition (the
"ARNM") in August, 2002. It has always been the position of the
Company that the price ceilings established by the ARNM in 2002
represent a violation of the Company's rights under the
privatization agreements relating to the Shymkent refinery, in
which the Republic of Kazakhstan guaranteed to the refinery the
right to sell oil products at "free market prices." To the best of
its knowledge, PKOP is the only provider of refined products
subject to price ceilings, although for some products (gasoline,
mazut, LPGs), PetroKazakhstan is not even the largest supplier of
these products in Kazakhstan. The ceilings established in 2002 did
not at the time reflect market prices. Currently the ceilings are
about 50% or less of market prices. Market prices are effectively
set by the competition of Russian imports, which can flow without
any restriction into the Kazakh market and are not subject to
Russian export taxes. The ARNM ceilings do not provide any benefit
to the ultimate consumer, which is charged at market prices by the
distributors. These ARNM ceilings applied to PKOP, however result
in a major shift of revenues from the refiner to the distributors.
These charges come after lengthy civil court litigation between
PKOP and the ARNM in relation to civil claims relating to the same
essential facts. The civil litigation remains pending at this time
in the City Court of Astana. These charges come also after
discussions aiming at agreeing on an overall transparent pricing
and distribution regime had made substantial progress, until
interrupted due to personnel changes in the administration. The
Company believes that the initiation of criminal investigations and
charges in relation to these issues is an unfortunate and
unnecessary escalation in what is essentially a civil dispute.
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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