Kazmunaigas Halts The Investment Programme In Romania
KazMunaiGas has decided to halt the investment programme in Romania following the DIICOT decision to seize the company assets and says that there are some countries that offer better terms and conditions. KazMunaiGas blames the ‘unclear situation’ in Romania and the ‘strange treatment’ that it is being subject to.
KMG International Senior Vice-President Azamat Zhangulov has said for rfi.ro that the deadline for the transaction with Chinese company CEFC, which was to become the Rompetrol Group owner, is being renegotiated in the context of the new file opened by the DIICOT prosecutors.
“Right now there is no lawsuit, only an investigation announced by DIICOT. The problem us that DIICOT has seized the KMGI assets within Rompetrol Rafinare and the assets of Rompetrol Rafinare. We believe such preventive measures are excessive. We currently operate under normal conditions. Nevertheless, the seizure does not allow us to continue investments and the equipment upgrading. This is a huge problem,” Azamat Zhangulov said.
He added that generally the investment programme is reconsidered. The investment programme in Romania is halted because KazMunaigas cannot invest when these investments are not safe.
Referring to the transaction with the Chinese company CEFC, Zhangulov said the partners have expressed concern regarding the future of the agreement. “We have carried out several rounds of discussions in order to find solutions, as the basis for the agreement with our strategic partners is sound. It’s not easy, it’s a delicate situation, we must rest assured that no decision made by the state would influence the aim of the agreement. They are decided to complete the transaction and we hope to be able to announce the means to continue the agreement,” the KMG International Senior Vice-President said.
“Investors normally look for secure locations. Therefore today, when there is a seizure of the assets, when the legal situation in the country is not clear, when you get the treatment that may seem strange or at least it is not normal, of course we cannot continue to invest in such an environment,” Azamat Zhangulov, KMG International Senior Vice-President said, quoted by RFI.ro.
“This would mean to invest in a high risk environment and it is not our policy to invest in such assets. At regional level there are several countries which offer better terms and conditions, certainly we want to go to these countries. However, things may change. From the strategic, fundamental and economic situation points of view Romania is a good place for investments. Maybe soon it will be also a suitable time for investments,” Zhangulov said.
Earlier this month the KazMunaiGas management said it is waiting for someone from the government to discuss about the situation of the group’s assets, which are under seizure. They warned they may request damages from Romania if they decide to sue the state to the Court of Arbitration in Washington for amounts of at least USD 2 billion.
According to a recent survey conducted by the Academy for Economic Studies (ASE) in Bucharest, KMG International has invested in Romania some USD 1.6 billion during 2007-2015 and ensures 44.6% of the country’s refining capacity. The group has contributed to the state budget 3% of the GDP. During 2013-2015 the company paid to the state budget USD 5.1 billion, the survey reveals.