KUALA LUMPUR (March 11): KNM Group Bhd has initiated arbitration proceedings against Lukoil Uzbekistan Operating Company LLC for over US$96 million in unpaid works it carried out as a contractor in gas-condensate fields in Uzbekistan.
The group’s wholly-owned unit, KNM Process Systems Sdn Bhd, submitted the request for arbitration against Lukoil with the Institute of the Stockholm Chamber of Commerce in Sweden today.
“The request for arbitration concerns a dispute arising from a contract for the supply of technical documentation and equipment for development of gas-condensate fields Adamtash, Gumbulak and Djarkuduk-Yangi Kilzilcha in Uzbekistan dated Dec 3, 2010,” KNM said in a stock exchange filing.
KNM was engaged by Lukoil as contractor. The original contract price was US$212.11 million and after subsequent addenda for change orders, the final contract price was US$272.03 million, the group said.
KNM is seeking claims and damages in relation to unpaid invoices for work done, costs arising from the breach of contract, costs from design changes, additional works, prolongation of the contract and financial losses, it said.
“In consultation with the company’s solicitors, the board is of the view that (we) have good claims in this arbitration,” KNM siad.
The group added that the arbitration is not expected to have any material operational and financial impact to KNM’s earnings for the financial years ending Dec 31, 2019 and Dec 31, 2020.
Shares in KNM closed down 0.5 sen at 10 sen today, leaving the group with a market capitalisation of RM236.94 million.