To close the deal

LUKOIL filed with the London Court of Arbitration a claim against the Chinese state-owned company Sinopec, which had refused to buy the 50% of Caspian Investment Resources (owner of four oil-extracting projects in Kazakhstan) from the Russian company. The two partners own 50% of the joint venture each, but the parties signed on April 15 of 2014 an SPA for the total amount of $1,2 billion. The deal as planned to be closed by the end of the last year, but the price was to undergo several corrections by the date of the closure. It was impossible to close the deal at once, because an approval from the Kazakhstan authorities was required.

Caspian Investment Resources owns 50% of the Alikbemola and Kozhasay projects (equally with Kazmunaygaz), Severnye Buzachi (50% owned by the Chinese CNPC), Arman (50% owned by Shell) and 100% in the Karakuduk project. The capacity of Alikbemola and Kozhasay exceeds 60 million tons of oil; Severnye Buzachi contains over 17 million tons of oil equivalents, Karakuduk – 23 million tons of oil. According to LUKOIL, the company’s share of extraction in those projects in 2013 was 10,2 million barrels of oil equivalents (approx. 1,4 million tons of oil) – approximately one third of the company’s extraction in Kazakhstan.

Evgeny Zhilin, Managing Partner of the Law Firm "YUST", believes that LUKOIL has reasons to go to court, but the judgment will depend on the exact wording of the contract provisions.