12 Nov 2008 11:28
12 November 2008
VOLGA GAS PLC
("Volga Gas" or the "Company")
Court Proceedings Cancelled
Volga Gas is pleased to announce that Kulyaev, Alexander Alekseevich has cancelled all proceedings filed against Volga Gas' 100% wholly-owned subsidiary Woodhurst Holdings and Trans Nafta. Volga Gas has also ceased its arbitration proceedings in London following news of the cancellation of the lawsuit.
Following the cessation of all proceedings, Volga Gas expects that production at Vostochny-Makarovskoye ("VM") will be able to come on stream in 1H 2009.
The suit, which was filed in the Basmanny Arbitration Court in Moscow, sought to unwind the sale of Gaznefteservis ("GNS"), the holder of the VM license, by Trans Nafta to Woodhurst Holdings ("Woodhurst") in September 2006. The basis of the suit was that Trans Nafta had not obtained the necessary corporate approvals to sell GNS to Woodhurst.
Volga Gas and Trans Nafta will combine their Gas Processing Units ("GPUs") and form a Russian Company owned and financed through a 75:25 split. Trans Nafta's GPU is already connected to the Gazprom pipeline network. Volga Gas will be able to begin selling its gas and condensate as soon as its existing wells are tied in to the GPU. The Company will operate the plant and prepare the gas and condensate at cost basis.
The combined facility will have sufficient capacity to process quantities of gas and condensate previously contemplated by Phase 1 and Phase 2 of VM's development. As a result of this agreement, the Company is evaluating what additional investments will be required within the GPU and a further announcement in this regard will be made in due course.
Mikhail Ivanov, Chief Executive of Volga Gas commented:
"We are pleased to be able to bring this matter to a successful close, with minimal impact on the operating business. As stated at the interim results, after careful consideration of the merits of the court case and of the Group's financial position, the Board decided to continue to invest in developing VM and we are now in a position to bring VM into production in 1H 2009."
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Volga Gas is an independent gas exploration and production company, which currently holds four subsoil licenses in the Volga Region of European Russia
For additional information please contact:
| Financial Dynamics | | |
| Billy Clegg Alex Beagley | | +44 (0)20 7269 7157 +44 (0)20 7269 7207 |
| | | |
| KBC Peel Hunt (Nominated Adviser) | | +44 (0)20 7418 8900 |
| Jonathan Marren Matt Goode | | |