Vitols threatens court action

  • 2010-11-10
  • Staff and wire reports

RIGA - Vitol Group, the largest shareholder in the oil transit company Ventspils nafta (Ventspils Oil), says in a letter to Latvian Prime Minister Valdis Dombrovskis (Unity) that the Latvia-Switzerland investment protection agreement has been violated and, therefore, Vitol plans to claim compensation of 130 million dollars from Latvia, reports The letter also emphasizes that this amount could increase up to 300 million dollars. If the state of Latvia does not take action to rectify the situation in the next six months, international litigation will be pursued, threatens Vitol.

The letter mentions several occasions when the Latvian-Swiss agreement on the protection of investments was violated. Therefore, Vitol wants Latvia to pay damages, because Latvia has not honored its obligations regarding the Vitol investment in VN and its subsidiaries, the company claims.
The warning then says that Latvia must ensure an acceptable, transparent, predictable, uniform and stable business environment, without any kind of discrimination.

In October 2006, Vitol, via subsidiary Euromin Holdings (Cyprus) Limited made a significant investment in Latvia by buying a 34.75 percent stake in VN. Later on, Vitol increased its stake to 49.5 percent. The investment by Vitol is one of the largest foreign investments by a foreign company in Latvia.

Vitol, on its Web site, asserts that it is one of the leading global oil and gas trading companies, with a strong presence in Russia and the Baltic region, with the objective to develop the business operations of Ventspils Nafta’s existing assets and thereby increase shareholder value. Vitol is in Ventspils for the long term and I am sure that we will be able to continue to successfully grow the transit business with a wide variety of partners, including Russian oil companies.
In the recent letter, Vitol urges Dombrovskis to launch consultations over the violations of the investment protection agreement.