LUKOIL did not defend the qualification – Newspaper Kommersant No. 9 (7454) dated 01/19/2023

LUKOIL in the first instance could not challenge Uralnedr’s refusal to allow the company to participate in the auction for the Nyatlongsky block in Khanty-Mansi Autonomous Okrug, as a result of which the license was awarded to Surgutneftegaz. Uralnedra considered the company’s qualifications insufficient to participate in the auction. LUKOIL’s interest was due to the fact that it has problems with the deterioration of the quality of the resource base in Western Siberia, its main region of presence in the Russian Federation. According to lawyers, although the practice of reviewing the results of trading in the oil industry is rare, LUKOIL still has a chance of success in the proceedings.

The court of the Sverdlovsk region dismissed the claim of the LUKOIL structure LUKOIL-Western Siberia, which challenged the decision of Uralnedr to exclude the company from the auction for the Nyatlongsky block in Khanty-Mansiysk Autonomous Okrug. Uralnedra cited the lack of confirmation that LUKOIL has the technical means and qualified specialists to develop the site as the reason for the refusal. Only Surgutneftegaz was admitted to the auction, to which Uralnedra was granted a license for the site in August. LUKOIL did not answer “Kommersant”.

In October 2022, LUKOIL applied to the court, which took interim measures, suspending Uralnedr’s decision to reject LUKOIL’s application. The court also suspended the license already issued to Surgutneftegaz for the Nyatlongsky area. In November last year, Rosnedra told Kommersant that during the audit of the agency, it was found that the protocols for considering applications did not reflect what “non-confirmation of the availability of technical means and qualified specialists for exploration and mining at the site” consists of.

LUKOIL claimed the Nyatlongsky area, since it borders on the company’s already developed Imilorsky field. The main resource base of LUKOIL in Russia is located in Western Siberia, and a significant part of it consists of highly watered fields and hard-to-recover reserves. The new sites would allow the company to contain the decline in production in Siberia.

Judicial practice on reviewing the results of auctions related to oil fields is practically absent, says Dmitry Myltsyn, a lawyer at the Moscow Bar Association Yakupov & Partners: LUKOIL was declared the winner. The court dismissed the claim.” However, he believes that LUKOIL has a good chance to challenge the judicial act, suggesting that “the application was not considered properly and the refusal was due solely to technical errors of the auction commission.” “The position of LUKOIL is shared by Rosnedra, which indicates some advantage, since the documentation of all persons participating in the auction was probably duly verified by the specified body,” the lawyer continues. If the court takes interim measures in the interests of the applicant, as happened in this case, there is a chance to win, he believes.

Stanislav Dabizha, a lawyer at the Kazakov and Partners law firm, cites the case on the application of Etkulzolot, as an example of challenging the results of the auction, in which the arbitration court of the Chelyabinsk region satisfied the requirements to invalidate the results of the auction. But, he notes, the subsoil law does not contain special rules regarding challenging the decision of the auction commission. “The dispute was considered only in the first instance, the decision of which can be appealed, therefore, LUKOIL’s remedies have not been exhausted,” concludes Mr. Dabizha. He also recalls that the court suspended the license issued to Surgutneftegaz, which “makes it possible to restore the rights and legitimate interests of LUKOIL in the event of a successful appeal against the decision of the court of first instance.”

Dmitry Kozlov