Court recognizes USD 12 mln in JKX damages made by Ukraine

JKX Oil & Gas (JKX LN) reported on Feb. 6 it has received a notification from an international tribunal recognizing that the Ukrainian government “was in breach of elements” of the bilateral investment treaty between the UK and Ukraine and it “has awarded JKX damages of approximately USD 12 million.” The company will issue further details on the ruling after more detailed study. JKX appealed to the international court in the Hague claiming that it incurred damages of over USD 180 mln due to the changing of Ukrainian legislation on gas production taxes.

Alexander Paraschiy: USD 12 mln looks too small compared to the claimed amount, so we see little positive from this news. Moreover, this possible compensation from the state will not cover the debt the company owes for under-paid taxes in 2015 (which amounted to USD 23 mln a year ago) and other other possible tax debts (about USD 11 mln). We are looking forward for more details, but based on the available information we see the court ruling did not improve the company’s financial stance much.