KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2011
F-161
60.
CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS
a) Ukrnafta dispute
The Joint Activity Agreement # 410/95 as amended (JAA) governed the joint exploration and development of
the Rudivsky-Chervonozavodsky gas condensate field in Ukraine (the RC Field) by Carpatsky Petroleum
Corporation (CPC), a subsidiary undertaking of Kuwait Energy, and Ukrnafta OJSC (Ukrnafta).
In September 2007, CPC commenced arbitration proceedings against Ukrnafta for various breaches of the
JAA including Ukrnafta’s refusal to permit CPC to make additional investments in the JAA in violation of
the provisions of the JAA permitting CPC to make such investments, in order to restore its investment in the
RC Field from approximately 14.91% back to the 50% level envisaged by the JAA.
The arbitration tribunal issued its decision on 24 September 2010 awarding CPC damages in the amount of
USD145.7 million plus post-award interest plus costs of approximately USD1.2 million, and declared the
JAA terminated by reason of Ukrnafta’s breach. This decision was confirmed by an arbitration tribunal on 16
November 2010. CPC is diligently pursuing collection of the award but has not yet recognized it in the
financial statements as recovery proceedings are ongoing.
Since CPC’s interest in the RC field has been terminated by the tribunal, the Group has re-classified all the
related historical assets and liabilities into ‘other receivables (See note 16). The receivables from Ukrnafta
will be set off against the arbitration award upon receipt.
2011
2010
USD 000’s
USD 000’s
b) Other contingent liabilities - letters of guarantee
16,466
21,238
c) Capital commitments (other than covered by
letters of guarantee)
84,952
87,762
61.
SUBSEQUENT EVENTS
The Company has entered into a facility agreement with a financing vehicle of Abraaj Capital Limited (from
the United Arab Emirates) under which Abraaj will make available a convertible loan of up to USD150
Million. If not converted, the outstanding loan will become repayable in three equal tranches over one year
after the expiry of 5.5 years from signature The facility is subject to a number of conditions precedent,
including shareholder approval at the forthcoming Annual General Meeting.
62.
PROPOSED DIVIDENDS
The Board of Directors proposed to distribute cash dividends of Pounds Sterling 0.045 per share for 2011
(2010: 5 fils). This proposal is subject to the approval of the Annual General Meeting. During the year 2010
the dividend declared by the Group amounted to USD 23,086 thousand and was paid during the year 2011.
