Ukraine’s Naftogaz seeks compensation for assets in Crimea

The fallout between Russia and Ukraine continues as Ukraine’s state-owned oil and gas company Naftogaz files for US$2.6 billion in damages over its lost assets in Crimea. Naftogaz and its subsidiaries filed a claim against the Russian Federation under the Russia-Ukraine Bilateral Investment Treaty, the company said in a press release.

“Upon unlawfully invading and occupying Crimea in 2014, the Russian Federation engaged in a widespread and well-orchestrated scheme to deprive Ukrainian companies of their property, without payment of compensation,” Naftogaz said. “[The company] owned some of the most valuable energy assets in Crimea and was among the Russian Federation’s chief targets. The Russian Federation’s actions violated the Russia-Ukraine bilateral investment treaty, which requires the Russian Federation to respect and protect Ukrainian-owned assets, including those in Crimea.

“Specifically, the Russian Federation’s scheme involved, among other actions, taking steps to formally nationalize Naftogaz’s oil and gas assets in Crimea, including by sending armed men to commandeer Naftogaz’s drilling platforms, and ultimately transferring almost all of Naftogaz’s Crimea-based assets to a Russian state-owned company.”

Naftogaz Ukrainy is wholly owned by the Ukrainian Cabinet of Ministers and consolidates the country’s largest oil and gas producing facilities. It holds a monopoly on the transportation and storage of natural gas in underground storage facilities and on the transportation of oil through pipelines across the country.

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