19 July 2005
Article in The Financial Times on Sibir Energy case

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Sibir wins initial Sibneft case

Arkady Ostrovsky

Sibir Energy, the UK oil minnow, has scored an initial success in its international legal battle with Sibneft, one of Russia's largest oil companies, which is controlled by the billionaire oligarch Roman Abramovich.

Sibir said it had secured a British Virgin Islands court injunction ordering Mr Abramovich and his company temporarily to deliver half the shares in Sibneft-Yugra, a subsidiary of Sibneft estimated to be worth up to Dollars 2bn, to the custody of a court receiver, and set aside Dollars 1bn as a guarantee.

Sibir, listed on London's Aim market, alleges that Sibneft has stolen a 50 per cent stake of Sibneft-Yugra, a joint venture the two companies had formed in 2000 to develop the vast South Proiobskoe field in western Siberia. It alleges Sibneft diluted its 50 per cent stake in the company to just 1 per cent through a share issue Sibir was never told about.

The ruling comes at a time when Sibneft and Mr Abramovich are believed to be in talks with Gazprom, Russia's gas monopoly, about the possible sale of the company.

Vladimir Putin, Russian president, earlier this month confirmed the two companies are in talks. Observers said that a legal case in an international court could complicate the talks between the two companies.

Sibir has unsuccessfully taken legal action in Russia and the court ruling represents its first significant victory in the international court. "This is an important victory for us. The case has been taken on by an independent court which is capable of considering the essence of our case," said Dmitry Afanasyev, a legal counsel for Sibir.

It is understood the court has also ordered Mr Abramovich and Sibneft to disclose all their assets worth more than Dollars 1m. This could prove to be damaging for the publicity-shy owner of Chelsea Football Club, who has never publicised his assets.

Sibneft claims that it acted within the law and in line with the broader agreements with Sibir's shareholders. John Mann, the spokesman for Sibneft, said he would not comment on the specifics of the BVI case. He said the company was intent on winning the ongoing litigation.