Ukrainian government sued by early shale natural gas explorer
London - UPI
JKX Oil & Gas, a company that bet on Ukrainian shale gas potential, said Monday it launched legal action against Kiev, claiming treaty violations.
"JKX is seeking repayment of more than $180 million in rental fees that its Ukrainian subsidiary has paid on production of oil and gas in Ukraine since 2011," the company said in a statement.
The company last year said new budget measures passed by the Ukrainian government meant higher taxes for the oil and gas industry in the country. The most significant, it said, was a move to nearly double the tax on gas production to close to 55 percent.
JKX, which has headquarters in London, said the market available to private gas producers in Ukraine was contracting, noting the competition for industrial customers was becoming "intense." In January, the company said the economic climate in Ukraine is no longer conducive to continue investing in shale natural gas opportunities
The company said Monday it started arbitration proceedings against Ukraine under a bilateral investment treaty between the British and Ukrainian governments.
"In these proceedings, JKX is seeking compensation for the losses it has suffered from Ukraine's treaty violations, including Ukraine's failure to treat JKX's investments in a 'fair and equitable' manner and failing to comply with commitments made by Ukraine in respect of JKX's investments," the company said.
The decision comes less than a week after Ukraine secured $17.5 billion in guarantees from the International Monetary Fund.
JKX started a multistage hydraulic fracturing operation in Ukraine in 2013, describing it as likely the largest operation of its kind in Europe to date.
Ukraine is one of the Eastern European countries rich in shale natural gas, though U.S. energy company Chevron in December terminated a production agreement because of legislative hurdles in the country.