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How Do You Steal An Oil Field? On-Going Case Tells How

The story that will follow is one of corporate machinations, armed strongmen storming a Siberian oil field and office head quarters, corruption and ludicrous amounts of money.

Feels like James Bond, no? But in 2001, according to Norex Petroleum's on-going suit, it all happened. On Thursday of last week, defendants in the case asked a New York judge to dismiss Norex's allegations that its oil field was stolen more than a decade ago, calling the continued case "a tired rehash of the same preposterous claims," Mike Sitrick, a spokesman for Leonard Blavatnik, told Bloomberg.

"For more than ten years, Norex has wanted a chance to be heard in court on the merits of our claims," said Norex Petroleum Chairman Alex Rotzan in a statement provided to the International Business Times. "We believe our case is compelling and backed up by the new evidence."

Norex Petroleum officials are hoping to retrieve more than $1 billion in damages and lost revenue, and are waiting for the New York Supreme Court to rule if it will take on the case.

"This is a window into everything that happened after the Soviet empire collapsed in the Reagan era," said Barry Ostrager, one of the attorneys representing Norex. "[Russia] is still a corrupt society. No one really knows what is going to happen in Russia."

A decision on whether or not the court will dismiss the case is likely to come by early next year.

Our story starts after the Soviet collapse, according to court documents filed in the Supreme Court of New York City, by Norex in June 2011.

In 1991, Norex Petroleum, a collection of Canadian and other oil industry players, partnered with a Russian oil company to form a subsidiary called Yugraneft with which the joint venture develops an oil field in Western Siberia. For years, according to the suit, Yugraneft paid millions in dividends to both Norex and its partner Chernogorneft the latter of which, has a minority share in the oil field. For a while, it was good.

Several thousand miles away and somewhere in New York City, according to Norex, billionaires Leonard Blavatnik and Victor Vekselberg, at the head of their respective companies Access and Renova, conspired with Alfa Group Consortium, TNK, and later TNK-BP Limited and BP itself, to wrestle control of Russian oil fields following the fall of the Soviet Union . By 1998, the two had their plan established. That year, they bankrupt Chernogorneft and assumed its 40 percent share in Yugraneft a year later.

But their aims were set back in March 1999 when Norex's shares in the oil field jumped to over 90 percent when it learned its former partner did not make the initial capital investment it said it would at the start of the joint venture.

Not to be out done, according to the suit, conspirator TNK filed a complaint in Russian court against Norex, claiming its technical know-how brought into the original joint venture was improperly assessed and therefore so was its ownership of its majority shares. Russian officials were bribed and upheld their claims in June 2001.

But because TNK did not, according to the suit, register its newly acquired shares under its name at the time of the meeting, Norex was able to use its remaining shares to reinstate Yugraneft's director general.

The very next day, attorneys and 16 TNK militiamen wearing fatigues and armed with Kalashnikovs entered Yugraneft's corporate office. They announced TNK assumed control of the company the day before at the shareholder's meeting and presented doctored "minutes" of the meeting to stake their claim, said the suit.

TNK militiamen then returned several days later, cut off Yugraneft's phone and internet service, and occupied the company's oil field and field office.

By Jan. 24, 2002 Russian courts rule in favor of the conspirators, and reduced Norex's interest to 20 percent. Since then, profits made from the seized Yugraneft oil field have gone straight to TNK-BP Ltd., formed in 2003 when BP and TNK became equal partners and assumed control over Yugraneft's assets, the suit said.

Almost a month later, Norex files suit in the Southern District Court of New York. The case was dismissed. In June 2011 Norex took its case to the New York Supreme Court.

"While anything is possible, given the facts and the law, I can't imagine that the defendants' motions to dismiss would be granted," Ostrager said.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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