Battle rages over Ukraine`s largest oil refinery

The latest attempt to settle a dispute between Russian and Ukrainian investors over control of Ukraine’s largest oil refinery brought no results. Ukrainian chief executive seized control of Kremenchug refinery last month intensifying a stand-off.

To reclaim the largest oil refinery in Ukraine, its former chief staged less than a peaceful comeback. Armed with a court ruling restoring his powers, and flanked by security guards, Pavel Ovcharenko, walked back into his old office at Ukrtatnafta last month.

However the stand-off between Russian and Ukrainian investors continues.

Disputed shares

Before the dispute the refinery was jointly owned by two companies – Ukraine’s Naftogaz on the one hand, and Tatneft and the Russian Republic of Tatarstan on the other.

At a later stage, an 18.2 stake was transferred to one Swiss and one US company, with links to Tatneft.

The Ukrainians never accepted the transaction and in May 2007 managed to write off the shares from the company’s authorized capital, in favour of Naftogaz.

However Tatneft retained influence through CEO Sergei Glushko.

Then came October’s dramatic seizure of control by former CEO of Kremenchug, Pavel Ovcharenko.

Caring for Ukraine?

Since then red billboards flooded Ukraine calling for the state to regain control of the plant. This civil group supports the recent take-over and accuses the Tatneft-linked management of presiding over huge losses.

“I am concerned about the growth of bank loans; they make up some 3.7 billion hryvnas. Certain companies together with Tatar investors tried to bankrupt Ukrtatnafta,” says Vadim Gladchuk, Head of “Civil Resistance Group”.

The former management backed by the Russian government rejects the debt accusations. It calls the re-instated chief an impostor. One of the founders of Ukrtatnafta says the take-over was illegal because the shareholders never formally re-elected Ovcharenko.

“When we called police to evict him, special armed forces arrived to protect him. It’s strange. Right after the attack, he siphoned off $US 130 million to his bank accounts and ordered local courts to stop any proceeding over the raider,” Rostislav Vahitov, Tatar Trade Representative claims

Russian and Tatar sides are also concerned about the position taken by Ukraine’s government.

They believe the conflict was instigated by the current Minister of Fuel and Energy but Yuri Boyko is now calling for a return to the status quo before the raid.

According to him, “these events hurt our investment climate. We consider Glushko the only legal chief of the refinery and we think that this conflict should be stopped as soon as possible to restore the work of the plant.”

His words appear to have little effect and Ovcharenko remains at the plant.

Russia has stopped supplying oil to it and the jobs of more than 9,000 people at the refinery are in doubt.

The shareholders meeting scheduled for Thursday fell through again. The Tatar investors decided against sitting at one table with current management who they call “raiders”. The Ukrainian side with a majority stake ignored the gathering too perhaps lacking the political will to sideline Russian interests and claim full control of the company.