Kolomoisky sues Ukraine over alleged USD 4.7 bln in Ukrnafta losses

Three Cypriot companies, controlled by billionaire partners Igor Kolomoisky and Gennadiy Bogolyubov, filed a complaint with the international arbitration court for the compensation of USD 4.67 bln in losses they allegedly incurred as a result of the Ukrainian government’s actions over oil producer Ukrnafta (UNAF UK), the dt.ua news site reported on June 6. The complaint alleges the Ukrainian government breached its international commitments under the Energy Charter, among them the confiscation of Ukrnafta’s natural gas by state holding Naftogaz in the late 2000s, changes made last year to Ukrnafta’s corporate structure, the removal of “investors” from company management and boosted royalty rates for oil and gas production imposed by the government.

In January 2015, the dt.ua news site published a letter from the same shareholders to the Ukrainian government, demanding compensation of about USD 5 bln in losses from Ukrnafta, in which they are shareholders in partnership with the Ukrainian government.

Alexander Paraschiy: The January 2015 letter of the “investors” (Kolomoisky and Bogolyubov) was submitted just after the Ukrainian parliament made an attempt to approve legislation to remove Kolomoisky’s management from Ukrnafta. This year, the lawsuit coincides with the attempts of Ukrnafta management to agree upon a restructuring of Ukrnafta’s tax debts in the amount of more than UAH 10 bln. At this stage, it’s hard to estimate how strong the position of the “investors” is in the potential arbitration dispute, but the presence of such a claim increases the chance that the government will agree upon the tax restructuring, in our view.