Stimul-T LLC's bankruptcy application filing in Russia might affect OIL's recoverability of loan advances

New Delhi: In a regulatory filing on Wednesday, Oil India Limited (OIL) said that Stimul-T LLC, a Russian registered legal entity, which owns and operates Licence 61(Oil Block) in the Tomsk region of the Russian Federation has voluntarily filed an application for bankruptcy administration in Russia on Wednesday due to its inability to pay off debts. As a result, "the recoverability, if any, of the loan advance(s), receivables, or underlying asset value that accrues to the interest of OIL through its wholly-owned subsidiary, Oil India International BV (OIIBV) having 50 percent equity holding in WIL and, by extension, in Stimul-T LLC cannot be estimated," the filing added.

Background

Oil India Limited (OIL) acquired 50 percent stake in WorldAce Investment Limited (WIL) in Cyprus through its wholly owned subsidiary, OIIBV in Netherlands, from PetroNeft Resources (PR), an Irish Company. The remaining 50 percent of WIL is owned by PR. WIL owns 100 percent of the equity in Stimul-T LLC, a Russian registered legal entity, which owns and operates Licence 61(Oil Block) in the Tomsk region of the Russian Federation, said the filing.

As per a news report by the Market Screener, Stimul-T was having a tariff dispute with Nord Imperial, which owns the pipeline connecting Licence 61 to the Transneft system, the pipeline was shut down last August. It also reported that even after having several meetings with stakeholders, the dispute was not resolved. As a result, Stimul-T had to suspend all operations on the oil fields in Licence 61 at the beginning of the fourth quarter of last year, which resulted in no revenue to pay its debts as they fall due. Stimul-T is now legally obligated, under the bankruptcy laws of the Russian Federation, to submit an application for bankruptcy administration.

Chair of PetroNeft Resources David Stuart said, "This is a very sad outcome, we have been trying to find a mutually beneficial solution which would have enabled us to continue operations at Licence 61. Although there have been numerous encouraging meetings in Tomsk, nothing has been forthcoming. If a resolution is found which would enable production to recommence and allow exports through the NI pipeline to market, it may be possible to reverse the bankruptcy process for the benefit of all stakeholders."

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