Monday, 6 September 2010
PK to pay damages to end Turgai dispute
Petrokazakhstan (PK), the 120,000 b/d producer which is 33 per cent owned by Kazmunaigas EP and 67 per cent by China National Petroleum Corporation (CNPC), has resolved a long-running legal dispute with Lukoil surrounding the Turgai Petroleum joint venture in which PK and the Russian giant are equal partners.
Under the settlement, which is based upon an arbitration ruling last year by the Stockholm Chamber of Commerce, PK will pay Lukoil damages of around $438 million to resolve a legal spat that dates back to PK's acquisition of a 50 per cent stake in Turgai Petroleum in 2005after PK was acquired by CNPC.
Lukoil filed a lawsuit claiming that it had pre-emption rights on the sale under the joint venture charter and this was backed up by the Stockholm court.
All the damages will be paid by CNPC. KMG EP, which had no role in the dispute, is absolved from any responsibility. In a statement, Lukoil said the settlement “represents the opening of a new relationship and further strategic cooperation” with CNPC, which is now the dominant foreign player in the Kazakh oil sector. Turgai Petroleum, which was established in 1995 as Lukoil-Kumkol, currently produces from the Kumkol oilfield. Most of the barrels are pumped east to China via the 920km pipeline which is jointly owned and operated by KMG and CNPC and will have its capacity doubled to 400,000 b/d by 2013.
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