Uzbek Economic Court initiates bankruptcy proceedings against Swiss JV

Uzbekistan, Tashkent, September 13 / Trend D. Azizov /

The Economic Court of Qashqadaryo in Uzbekistan has initiated bankruptcy proceedings against two major oil and gas ventures created with the participation of Switzerland's Zeromax GmbH - Ltd., Kokdumalak Gas Ltd and JV Gissarneftegaz, the State Demonopolization Committee said.

According to a court decision dated Sept. 7, the enterprises will be monitored and a Qashqadaryo Administration of the State Demonopolization Committee employee will be appointed as a temporary administrator. The tax authorities of the republic have initiated bankruptcy proceedings.

According to the bankruptcy law, the interim manager will review the financial condition of enterprises and prepare a register of creditors' claims in a month's time. The first meeting of creditors of Kokdumalak gas is scheduled for Oct. 15, while a meeting of Gissarneftegaz creditors is due to take place Oct. 16.

According to the law, creditors' meetings must make a decision to apply to the economic court for the imposition of further forms of bankruptcy such as judicial rehabilitation, external administration, declaring the debtor as a bankrupt or liquidation proceedings.

The trial must be held not later than 10 days since the first meeting of shareholders in accordance with the law.

According to the law, the main feature of bankruptcy is the debtor's arrears amounting not less than $500 of the minimum wage (about $13.5) on the date of appeal to the Economic Court.

The debtor may apply to the Economic Court to postpone the proceedings to satisfy creditors' claims. The court, considering the possibility of the debtor, can satisfy his request and give him thirty days to pay off creditors and eliminate bankruptcy.

JV Kokdumalakgaz was established in 2004 with authorized capital of $300,000 by Switzerland's Zeromax and its unitary subsidiary Uzbekneftegaz-Mubarekneftegaz on a parity basis to utilize associated gas on the gas condensate field Kokdumalak in Qashqadaryo region.

The joint venture carried out a phased construction of booster compressor station worth $355 million on the field in 2005-2009. The total estimated capacity of utilization is 6.1 billion cubic meters of gas, production - 435,000 tons of gas condensate and 66,000 tons of liquefied gas annually.

The project was financed at the expense of the joint venture, as well as loans without governmental guarantee.

Zeromax and Uzbekneftegaz created Gissarneftegaz Ltd. on a parity basis to search and explore new oil and gas deposits, as well as develop hydrocarbon reservoirs with the subsequent processing and sale in 2005. When the assets of the company were seized, about 20 percent stake in the joint venture were owned by affiliate organizations of Russian energy giant Gazprom.

The $400 million project provided for the exploration for oil and gas within Tagam-Shimoli of Tandirchin zone in Hissar region and commissioning of five gas condensate fields in Bukhara-Khiva region. The project was designed to last 25 years.

JV Gissarneftegaz was to produce up to three billion cubic meters of gas a year at full capacity. The volume of accumulated production is about 30 billion cubic meters of natural gas, one million ton of gas condensate and 500,000 tons of oil.

The project was financed through Zeromax, as well as loans attracted without Uzbek governmental guarantees.

Tax problems for both joint ventures are related to the arrest of one of the founders of Zeromax GmbH.

It was reported that the Tashkent City Economic Court in early May seized all the property Zeromax in Uzbekistan, including cash and shares in the company of other economic entities in Uzbekistan.

These actions were carried out for the recovery of the debts of credit companies, the amount of which was undisclosed.

Zeromax GmbH has been operating in Uzbekistan since 1999. The company is co-founder of roughly 10 joint ventures and subsidiaries operating in the oil and gas industry in the republic.

Zeromax's subsidiary is also involved in the design and implementation of reconstruction projects, construction of facilities in the fuel and energy industry.

According to Uzbekneftegaz, the branches of the Swiss company carried about 80 percent of construction work in the oil and gas sector. In particular, Zeromax is one of the contractors for the construction of the Uzbek section of Turkmenistan-China gas pipeline.

The Swiss company owns a chain of filling stations in Uzbekistan. Besides its oil and gas companies, Zeromax has assets in the textile, food processing, construction, mining and agricultural industries of Uzbekistan. Investments by the company in the republic's economy total $800 million.

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