Victoria Energy Central Asia LLP (VECA), a subsidiary of Victoria Oil & Gas Plc, has temporarily suspended production from Kemerkol pending resolution of the legal claim against VECA, which was reported in the Company's announcement on April 25, 2008.
An initial hearing at the local economic court upheld the claim against VECA. The Company and its Kazakh legal advisors believe that this decision contravened several precepts of Kazakh legal and procedural practice. The appeal courts in the Atyrau Oblast have declined to revisit the claim against VECA and the appeal will therefore now be taken to the Supreme Court of the Republic of Kazakhstan.
Victoria has also sent petitions to the General Prosecutor for the Republic of Kazakhstan and to the Presidential Anti-Raider and Anti-Corruption Executive Committees to investigate what the Company believes to be a fabricated attempt to undermine VECA's rightful title to the Kemerkol license. Victoria has been notified by the Office of the General Prosecutor that, under instruction from the President of Kazakhstan, an investigation has been launched into the details of the case.
The Board of Victoria stressed to shareholders that the claim against VECA is, in the opinion of the Company and its Kazakh legal advisors, without any justification. A vigorous defense of VECA's rights is being conducted with the full knowledge of the regulatory authorities and the illegal nature of this attack has been highlighted.
The Board is also aggressively pursuing options for counterclaims against the perpetrators in jurisdictions outside Kazakhstan, but maintains every confidence that Kazakhstan's justice system will prevail. The Directors believe that this attack blatantly contravenes the Rule of Law in Kazakhstan and if this type of raid is allowed to succeed it undermines the country's entire investment climate.
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