2017 September 26

Karpatygaz’s standpoint in respect of court proceedings with Sberbank

On September 4, 2017, Kyiv Commercial Court delivered its judgment in the case No. 910/765/16 under the debt recovery claim filed by  Sberbank PJSC against Ukrgasvydobuvannya (UGV). Taking into account numerous media publications on the merit,  Karpatygaz LLC considers it necessary to express its standpoint in this regard.

Please be reminded that starting from February 25, 2011 within the framework of the Joint Activity under JAA No. 3 there has been incrementally produced over 3.5 BCM of natural gas, built seven booster compressor stations with Khrestyshchenska BCS, being the most powerful one in Ukraine and ensuring production of about 40% of UGV’s total natural gas production, workedover 70 wells, drilled 4 new wells, paid over UAH 11 billion of taxes to the State Budget of Ukraine, etc. At that time UGV was not able to build and repair these facilities on its own in a view of financial resources deficit.

However, as of today, the new management UGV has basically obstructed functioning of JAA 3 by its actions/inactions including, but not limited to the following:

1. Starting from December 2016 production, UGV has been unilaterally refusing to transfer hydrocarbons to the Joint Activity under the Service Agreement, which completely deprived the Joint Activity from the hydrocarbons sales proceeds. At the same time, UGV does not comply with the legally binding decisions of the Kyiv city Economic Court delivered in the cases No. 910/21002/16 and No. 910/5917/17, establishing the fact of groundless and illegality of UGV’s unilateral refusal to transfer hydrocarbons to the Joint Activity.

2. Since May 2017 UGV has not been making lease payments to the Joint Activity for the lease of seven booster compressor stations, depriving the Joint Activity from its rightful lease income.

3. UGV refused to enter into an Additional Agreement to the Loan Agreement with PJSC Sberbank regarding the loan restructuring, which resulted into PJSC Sberbank filing a claim against UGV as a Guarantor under the Loan Agreement, and losses for the Joint activity in the form of penalties accrued from PJSC Sberbank. The judgment of the Kyiv city Economic Court delivered in the case No. 910/765/16 under the claim filed by PJSC Sberbank against UGV did not come into force in a view of the appeal filled by UGV on 14.09.2017. Subsequently, discussions regarding any material losses inflicted on UGV are premature.

Karpatygaz and Misen place reliance in international commercial arbitration to protect their violated rights and expect due reaction from the respective Ukrainian authorities.

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