JKX Initiates Legal Dispute Against the Russian Federation Over the Nationalization of the Group’s Investments
February 17, 2025 JKX Oil & Gas Group (JKX) announced that, in January 2025, it notified the Russian Federation of a legal dispute arising from Russia’s nationalization of JKX’s investment in Yuzhgazenergie LLC (YGE), an oil and gas exploration and development company that operates the Koshekhablskoye gas field in the Russian Republic of Adygea, and Catering Yug LLC (Catering Yug), a services company that supports YGE.
Russia began to take unlawful action affecting JKX’s investment in 2022, when it enacted sanctions and began a campaign of harassment against foreign individuals and companies from “unfriendly countries,” including the United Kingdom. In 2023 and 2024, Russia’s courts issued a series of decisions suspending and, ultimately, nationalizing JKX’s investment.
Russia’s nationalization of JKX’s investment violates the protections accorded to JKX under the Energy Charter Treaty, the Agreement between the United Kingdom and Russia for the Promotion and Reciprocal Protection of Investments, and international law. JKX has invested hundreds of millions of U.S. dollars into YGE and Catering Yug, yet Russia has offered JKX no compensation for this expropriation.
JKX remains open to discussing the amount of compensation with Russia and, if such compensation is not forthcoming, intends to fully assert its legal rights in arbitration.
To recap, prior to the confiscation of JKX's investments in Russia, the company's management had decided in 2021 to exit the Russian market and sell all existing assets. However, at the beginning of 2022, following Russia's full-scale invasion of Ukraine, the transaction was not completed due to the buyer's unilateral withdrawal from the deal.
After the sanctions were imposed by Ukraine, the EU, the UK, and the US against Russia (and counter-sanctions imposed by Russia on foreign investors), JKX Oil & Gas Group fully lost control over its Russian business.
In the 2022 annual financial report of JKX Oil & Gas Group, submitted to the UK Companies House, data on assets in Russia were not included. Since 2022, none of the JKX Oil & Gas Group companies have received any payments or dividends from Russian companies or made any payments to them.
The interests of the British JKX Oil & Gas Group in its legal dispute with Russia are represented by the globally renowned law firm Covington & Burling.
We also emphasize that the JKX Oil & Gas Group has strictly adhered to all international sanctions against Russia from the very beginning and has consistently supported Ukraine’s Defense Forces. Since the start of the full-scale invasion, JKX Oil & Gas Group has allocated over UAH 210 million (over GBP 4 million) to support Ukraine’s Defense Forces.
