Euractiv | 23 November 2022
Vienna-backed Austrian firm wields controversial energy treaty against Kyiv
By Nikolaus J. Kurmayer
AMIC Energy, an Austrian private equity firm, is threatening to sue Ukraine based on the Energy Charter Treaty (ECT) after its assets were seized by Kyiv over the company’s close ties to Russia.
AMIC Energy heads a network of petrol refilling stations in Central and Eastern Europe.
After Moscow was sanctioned for its illegal annexation of Crimea, Russian state company Lukoil came under pressure to sell off its network of gas stations in East European countries. Around 2015, AMIC Energy purchased a number of them, including in Ukraine, Poland, and Lithuania.
Former Austrian state secretary Wolfgang Ruttenstorfer helped broker the deal. He had previously co-engineered Austria’s energy dependence on Russia while at the helm of energy giant OMV.
But AMIC Energy’s fortunes in Ukraine were dealt a major blow this year when the Ukrainian Bureau of Economic Security seized gas stations, warehouses and plots of land – 308 assets in total – belonging to AMIC Energy, the government announced in August, following Russia’s invasion of Ukraine in February.
The Ukrainian authorities accused AMIC Energy of using creative loans and shell companies to declare losses in Ukraine and funnel money out of the country, costing Kyiv hundreds of millions of euros in taxes.
“Their actual owners are citizens of the Russian Federation”, the Ukrainian authorities said in justifying their decision to seize the Austrian firm’s assets.
The same day, Ukrainian Foreign Minister Dmytro Kuleba sent a letter to the secretariat of the ECT, notifying that Russian citizens would be denied the advantages of the treaty. Ukraine and Austria are both parties to the ECT, a controversial energy investment protection treaty dating back to the 1990s, while Russia is not.
“There is no logic in the fabricated and illegal accusations,” AMIC Energy replied in a statement.
The company has since sought support from the Austrian government through the recently reopened embassy in Kyiv.
At a press conference on 15 September, an AMIC representative, flanked by the Austrian Ambassador to Kyiv Arad Benkö, reminded Ukrainian journalists that “legal arbitrariness in a European Union candidate country should no longer happen, and we will not let it happen.”
Less than two months before, Ukraine had been awarded EU candidacy status.
“The Austrian Embassy is confident that adherence to the democratic principle of the rule of law and to European standards of justice is a key factor for Ukraine’s stable economic development and its future European integration aspirations,” said Benkö, who had previously been posted in Georgia for four years.
“The embassy will continue to closely monitor the course of the investigation,” the Austrian ambassador to Kyiv concluded.
The Austrian foreign ministry told EURACTIV that one of the core missions of its network of embassies was “to support the protection of their rights and interests abroad”.
“Just as we expect Austrian companies to abide by local laws, we expect other states to abide by the rule of law and international and European standards,” a foreign ministry spokesperson added.
Whether the Ukrainian claims are founded, or not, remains unclear.
“They [Russia] have been reliable for the last 40 years and will continue to be so for the next 20,” Ruttenstorfer, the long-time chairman of the supervisory board of Amic Energy, told trend in 2008, at a time when he represented the Austrian government on the board of OMV, Austria’s biggest energy company.
From 2012 to 2019, Ruttenstorfer sat on the board of the Serbian energy firm Nis, of which GazpromExport, a Russia state-owned company, holds 50% of the shares.
Another owner of AMIC Johannes Klezl-Norberg, is also the owner of a Russian bank.
According to research by the Centre for European Policy Studies (CEPS), Klezl-Norberg owns more than 50% of the shares of PJSC KB “Rusregionbank,” whose assets total €8 million
Klezl-Norberg currently holds 25.1% of the company’s shares, according to the Austrian company register. In 2015, Klezl-Norberg held 50% of Amic shares, at a time when Lukoil was consolidating its European holdings in Vienna.
More trouble for the ECT
Whether the ECT is actually going to be used is not decided yet. “When we exhaust national remedies, we will proceed with any kind of international arrangement,” a representative of the company told journalists at the September press conference.
The international agreement that came into force in 1998 and was initially designed to promote oil and gas investments in the former Soviet bloc appears closely connected to the proceedings, as indicated by the August letter.
In this instance, though, the ECT may be working as intended – it was designed to protect Western investments from “unfair” treatment by authorities in former Soviet countries.
Several EU countries have recently announced their intention to withdraw from the ECT. Italy left in 2015, while Spain, Poland, Slovenia, France and Germany have announced their intention to follow suit, citing environmental concerns and the ECT’s incompatibility with the Paris Agreement.
An attempt to reform the CET failed on Friday (18 November), which prompted Austria to consider an exit as well.
Austria is located geographically close to many nations once part of the USSR and is strongly invested in the region through OMV and the country’s banking sector.