China’s Sinopec refused to buy from « » 50% in Caspian Investment Resources Ltd. ( CIR), the Russian company said. « Lukoil” sees this as a breach of contract, the company filed a lawsuit in a London arbitration for the recovery of damages. The amount of the failed transaction ?? $ 1.2 billion, as « Lukoil” intends to recover from Sinopec, the report stated. The representative of the « Lukoil” refused to comment on the request in Sinopec « Sheets” have not responded.
50% CIR already owned by Sinopec, a contract of sale the remaining stake was signed in April 2014, was supposed to complete the deal before the end of last year .
CIR owns stakes in development projects North Buzachi, Karakuduk, Arman, as well as in the company « KazakhOil-Aktobe » ( Alibekmola and Kozhasai) in Kazakhstan. « Lukoil” entered into these projects in 2005. Total reserves ?? 160 million tons, in their development « Lukoil” has invested more than $ 958 million, said on its website « Lukoil Overseas».
The assets of the company has received over $ 2 billion in 2005 as a result of the absorption of the Kazakhstan Nelson Resources. Its enterprises were transferred CIR, owned by « LUKOIL”. In 2006, 50% of the company « Lukoil” Traded Funds Mittal Investments Lakshmi Mittal. The deal amounted to $ 980 million, the fund also took on about $ 160 million of debt CIR. Four years later, Mittal Investments sold his share of Sinopec. In « Lukoil” was an option to purchase this share, but the Russian company did not use it.
In 2013, the share of « Lukoil” in the extraction of these deposits amounted to 10.2 million barrels of oil equivalent. However, production from these fields is falling, while its growth continues only on North Buzachi, said in April, a source close to the « Lukoil Overseas “. To maintain production needs new investment, while « Lukoil” wants to concentrate on other projects in Kazakhstan, he explained the reasons for selling asset. Funds received from the transaction, planned to send to the projects in the field of exploration, including in the Kazakh sector of the Caspian Sea.
Sinopec refused the deal is likely due to falling oil prices ?? since April last year, has decreased by 2 times. Accordingly, the price of $ 1.2 billion for the asset no longer seems so attractive, although at the time it was below the level of transactions in the Russian oil and gas sector, says analyst Raiffeisenbank Andrey Polishchuk.
Obviously, due to the decline in oil prices has changed the value of the asset, Sinopec could refer to the fact that this is a significant change in the circumstances of the transaction, and to abandon it, says the head of the corporate practice group Goltsblat BLP Anton Panchenkov. « Lukoil” can also be considered a detriment as the difference between the current price of the asset and the price of which the parties have agreed in April, he said.
According to English law « Lukoil” can not rely on the fact that its losses will be compensated in full volume, and should take all possible steps to reduce their size, says Head of International Arbitration Art de Lex Arthur Zurabyan. Accordingly, now « Lukoil” should be interested in the speedy sale desheveyuschey asset recovery and differences with Sinopec. If the company will delay the sale, the court may reduce the compensation in the amount of those damages that « Lukoil” could have been avoided by selling the asset before.
At current oil prices, an analyst BCS Cyril Tachennikov 50% CIR estimates at $ 600-700 million. He doubts that « Lukoil” will be able to find a buyer for today non-controlling interest.
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