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KazMunayGas Companies Issue Notice of Investment Dispute to the Government of Romania


On July 22nd, 2016, both JSC National Company KazMunayGas (KMG) and KMG International N.V. (KMGI) submitted to the Romanian authorities a Notice of Investment Dispute based on the Agreement between the Government of Romania and the Government of the Republic of Kazakhstan, the Agreement between the Government of the Kingdom of the Netherlands and the Government of Romania and the Energy Charter Treaty.

The arbitration dispute concerns the treatment applied by the Romanian authorities to the investments performed by KMG and KMGI in their Romanian subsidiaries, namely: Rompetrol S.A. (now Oilfield Exploration Business Solutions S.A., Oilfield), Vega S.A. (Vega), Rompetrol Rafinare S.A. (RRC) and other related Romanian companies.

KazMunayGas Companies’ letter to the government of Romania also details asset freezes totaling more than $2.1 billion and the company’s belief that it appears to be the intention of the authorities to seize and nationalize assets that have generated tremendous benefit for the Romanian economy and people.  KazMunayGas Companies have already invested around $4billion (including the acquisition price of the Group by KazMunayGas NC) of spending inside the country with plans to direct billions more in funds to plants, facilities and communities where the Group does business.

Mr Azamat Zhangulov, Senior Vice President of KMG International has said today: “We always stand ready to explain to the Government of Romania the need for our investments to be protected as a matter of legal obligation under law. We are committed to continue investment in Romania and building on the significant work we have already done. However, we cannot put further capital at risk unless and until the authorities demonstrate respect for rule of law.  If no solution is found, we are compelled to use all legal means to defend our rights and obtain compensation and that includes international arbitration against the State. However, we sincerely hope that an amicable solution can still be found with a view to allow us to continue investments in Romania so as to contribute to Romania’s objective of becoming a major energy hub in the Black Sea region.”

Further to the submission of the Notice of Investment Dispute, should a settlement between KMG and Romania fail to be reached, the case will be referred to and settled by the International Centre for Settlement of Investment Disputes under World Bank, headquartered in Washington, D.C or to the Arbitration Institute of the Stockholm Chamber of Commerce, in line with the provisions of the treaties and with KMG companies’ envisaged reliefs and measures to be obtained.

Source: www.rompetrol.com