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. Last Updated: 07/27/2016

$650M Menatep Claim to Go Into Arbitration

Group Menatep, the main owner of stricken oil firm Yukos, said Friday that it would launch arbitration proceedings in London this week to recover a $650 million debt from state-owned Rosneft.

The sum is the remainder of an original $1.6 billion loan to Yukos, which subsequently fell to $900 million and then to $650 million as Menatep managed to secure money from Yuganskneftegaz's exports before the sale of Yugansk, which has since stopped exporting. Yugansk, formerly Yukos' biggest production unit, was bought by Rosneft late last year.

Menatep managing director Tim Osborne, who once promised "a lifetime of litigation" for anyone who bought Yugansk, said he was 100 percent confident of recovering the rest.

"It's a slam dunk," he said. "They signed a guarantee for this indebtedness. There doesn't seem to me to be any debate but that the debt is payable and the debt is callable.

"They submitted to the arbitration, so they are committed contractually to the arrangements. One assumes that they will participate in the arbitration in accordance with the contract that they signed."

The loan arbitration case comes on top of another, far larger arbitration case that Menatep has launched under the Energy Charter, an international treaty designed to enforce international law in energy investments.

That claim is against the Russian government itself and totals $33.1 billion, including a demand from Menatep for $28.3 billion and from Yukos' pension fund, Veteran Petroleum, for $4.8 billion.

Yugansk was also the security for a syndicated loan from Western banks, including Societe Generale, Citigroup and Deutsche Bank. They called in the outstanding $540 million in February, but a Russian newspaper report earlier this month said that Rosneft has told the banks to recover the money from Yukos instead.

Rosneft is also pursuing a court action of its own: In May, a court will consider an $11 billion suit filed by Yugansk against its former parent, seeking payment of its back tax bills and compensation for lost profits.

(Reuters, AP)