Lukoil asks Kazakh Court to invalidate a signed International Arbitration agreement with PetroKazakhstan regarding the KAM pipel
24 Mai 2005 - 4:00PM
PR Newswire (US)
Lukoil asks Kazakh Court to invalidate a signed International
Arbitration agreement with PetroKazakhstan regarding the KAM
pipeline CALGARY, May 24 /PRNewswire-FirstCall/ -- PetroKazakhstan
Inc. (the "Company") announces that Lukoil Overseas Kumkol B.V.
("Lukoil") and the Company's joint venture with Lukoil, Turgai
Petroleum ("TP") have filed a claim in which both Lukoil and TP
seek to invalidate the international arbitration provisions
contained in a written and signed agreement between the Company,
the Company's subsidiary AO PetroKazakhstan Kumkol Resources
("PKKR"), Lukoil and TP, in relation to the Kumkol - Dzhusaly
Pipeline (the "KAM Pipeline"). The case is currently scheduled to
be heard on May 27th by the KyzylOrda Oblast Court. The KAM
Pipeline was formed as a consortium between PKKR and TP in December
2002. The Company as well as PKKR, Lukoil and TP signed agreements
related to the consortium. TP has been shipping and continues to
ship part of its production through the KAM pipeline, achieving
substantial transportation costs savings. Consistent with
international practice, the parties have voluntarily agreed to
submit the resolution of their disputes to international
arbitration. Any resultant arbitral award will be recognized and
enforced under the terms of the 1958 New York Convention on the
Recognition and Enforcement of Foreign Arbitral Awards, an
international convention signed by Canada, the Republic of
Kazakhstan and Russia. There are very rare exceptions under which a
signed and binding international agreement to arbitrate will not be
recognized. The Company does not believe any of these exceptions
apply in the current context. Nevertheless, Lukoil and TP, having
signed and agreed to international arbitration, have filed a claim
in a Kazakhstan court asserting that one of these agreements
violates Kazakhstan law based on the tenuous argument that it
relates to the ownership of Kazakhstan-based immovable property
(real estate) and is, therefore, exempt from international
arbitration. The Company believes that Lukoil's goal is to cause TP
to exit from the KAM Pipeline consortium as a co-investor, without
fair compensation for its use to date, and to continue to use it in
the future by forcing the Company to provide access to the KAM
Pipeline as a regulated pipeline. The Company observes that this
would be in line with Lukoil's overall business tactics, which
appear to be oriented to receiving the benefits of
PetroKazakhstan's investments without having to participate in
their costs or to pay fair compensation for the benefits received.
PetroKazakhstan views the abandonment by Lukoil of its prior
commitments as yet another example of the unreliability of Lukoil
as a joint venture partner and the failure by Lukoil to adhere to
international business practices. 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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