Ambivalent about investing in America? Indifferent to Europe? Considering Ukraine? Then you’ll be relieved to know that Paul Davies, CEO of Britain’s JKX Oil & Gas, recently foiled a state agency’s attempt to expropriate one of its subsidiaries, Poltava Petroleum. Although Ukraine is said to be as steeped in corruption as in oil and gas, a ruling by its Supreme Arbitration Court thwarted the move - and was hailed by foreign investors who see a potential bonanza as the country privatizes its petroleum industry.
After Ukraine’s State Property Fund expropriated a Greek oil and gas concern last year, Davies, 51, marshaled support against a possible takeover of Poltava. U.K. Prime Minister Tony Blair, the U.S. and the EBRD all warned Ukrainian President Leonid Kuchma that obtaining foreign aid would be difficult if JKX was forced to forfeit its operations in a similar manner.
The state fund, which holds a 25 percent stake in Poltava, called a shareholder meeting in March - without notifying JKX - and voted to transfer JKX’s 49 percent share to an oil company, Naftogaztechnologia, that’s supposedly run by a local media baron. The next day a dozen armed men showed up at Poltava, demanding control. Davies was ready. “When we showed them the court order, they realized they could never claim a legitimate use of force, so they turned around and left,” he says. “I don’t think we will see anything as blatant and crude as this again. Further efforts to take control of the subsidiary are likely to play out in a court of law.”
