LUKoil Starts Legal Action Against China’s Sinopec Over Contract Breach

MOSCOW (Sputnik) — Russia's energy company LUKoil lodged arbitration in London after Chinese energy giant Sinopec backed out of a $1.2-billion deal, the company said in a statement Monday.

In April 2014, LUKoil announced the signing of a sale and purchase contract, under which it intended to sell its 50-percent stake in Caspian Investment Resources, Ltd. to its Chinese partner Sinopec.

"Sinopec has refused to finalize the deal, which is considered as a breach of contract by LUKoil. Today, LUKoil started arbitration proceedings against Sinopec regarding the significant damage inflicted," the Russian company said in a statement.

Caspian Investment Resources Ltd holds stakes in four hydrocarbon-production projects in Kazakhstan. As a result of the deal Sinopec would have held the entire 100 percent in the company.

Sinopec purchased the other 50-percent stake in Caspian Investment Resources from Indian billionaire Lakhshmi Mittal in 2010. It was expected that after selling its share, LUKoil would continue to participate in Kazakhstan hydrocarbon-production projects, including Kumkol, Karachaganak and Tengiz projects.