BVI Court Orders Freezing Of Assets In Russian Oil Joint-Venture

by Amanda Banks, for LawandTax-News.com, London

20 July 2005

Sibir Energy Plc, the British-based energy firm with holdings in Russia, has commenced an action in a court in the British Virgin Islands over assets worth up to $2 billion which the company claims were misappropriated by Russian oil firm Sibneft.

According to a statement by Sibir, on July 13, the BVI Court ordered that a Receiver is temporarily appointed to take over a 49% stake in Sibneft-Yugra, the joint venture between Sibir and Sibneft.

In November 2000 Sibir Energy and Sibneft, controlled by London-based Russian billionaire Roman Abramovish, established a joint venture company, Sibneft-Yugra, which would develop the South Priobskoye oilfields in Western Siberia. Each party owned 50%, with Sibir contributing the field licenses and Sibneft the means of development.

However, Sibir claims that in September 2002 and February 2003 Sibneft arranged shareholders meetings at which Sibir's interest in Sibneft-Yugra was diluted from 50% to 0.98%. Sibneft formally maintained its 50%, with the remainder being eventually transferred to three offshore companies which were later revealed to be controlled by Sibneft.

Henry Cameron, Chief Executive of Sibir Energy, commented: "We have promised to pursue those responsible for the dilution of our interests. We have started proceedings in the British Virgin Islands because BVI companies have been used as vehicles to commit the fraud.

"We have also sued Sibneft and Roman Abramovich because we believe they directed and procured the dilution of our interests. Mayor Luzhkov has already stated that he is throwing the full support of the City of Moscow and the Moscow Oil & Gas Company behind our efforts to ensure that the share of Sibneft-Yugra is returned to Sibir."

The 49% stake will remain frozen pending a further court hearing scheduled for July 28.

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