April 25 (SeeNews) - Austria's OMV, the parent of Romania's top oil and gas group, OMV Petrom [BSE:SNP], said on Tuesday it had taken the Romanian state to the Paris International Court of Arbitration over a breach of the privatisation contract regarding compensation for environmental investment.
In April 2016, OMV notified Romania about a number of unpaid claims for the decommissioning of several wells and environmental rehabilitation in the amount of some 34 million euro, with OMV and the Romanian state having 180 days to settle the dispute amicably, the company said in its 2016 report published on the corporate website.
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"This deadline expired on October 19, 2016, and on March 7, 2017, OMV initiated the arbitration procedures against the Romanian state, in line with the regulations of the International Chamber of Commerce in Paris," OMV said.
According to the evaluations made by OMV, the total amount it has to recover from the Romanian state to settle this type of investment expenses amounts to 542 million euro ($590 million). The amount also includes future works to be carried out by the company, funding for which must be reimbursed, according to the provisions of the privatisation contract.
"The reimbursement of these expenditures will be requested from the Romanian State progressively, as the works will be completed," OMV said.
Romania sold Petrom to OMV in late 2004. The Romanian state is obliged under the privatisation contract to fully compensate the company, for a period of 15 years, for any claims related to previous pollution of the environment and to pay all costs related to the closure of oil wells for a period of 30 years.
OMV Petrom swung to a 1.038 billion lei ($241 million/228 million euro) net profit in 2016, from a 690 million lei loss in the previous year. The company was present on the oil products retail markets in Romania and neighboring countries through 783 filling stations as of end-2016.
It is the largest integrated oil and gas group in Southeastern Europe, with oil and gas production of some 64 million boe in 2016. The group has a refining capacity of 4.5 million tonnes per year and operates an 860 MW high-efficiency power plant as well as a 45 MW wind park.
Blue-chip OMV Petrom was traded 0.62% lower at 0.3220 lei by 1631 CET on the Bucharest Stock Exchange.
(1 euro=4.5250 lei)
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