Court upholds the claim of the State Property Fund to return the Ukrainian part of the Samara-Western Direction oil pipeline to state ownership

On June 26, 2023, the Commercial Court of Zhytomyr Region upheld the claim of the State Property Fund to recognize the state's rights to own a part of the oil pipeline "Samara-Western Direction" in Ukraine by the SPFU.

Ukraine has been trying to return this asset to the state ownership for several years.

The "Samara-Western Direction" oil pipeline was built during soviet times between 1957 and 1968. At the time of the Soviet Union collapse, the pipelinewas the common property. After Ukraine declared its independence, this pipeline was supposed to become state property of Ukraine. However, this did not happen. The russian company "Transnefteproduct" operated this asset for many years.

Only in 2011, following a claim by the Prosecutor General's Office, the Commercial Court of Rivne Region recognized the Ukrainian ownership rights to the Ukrainian part of the Samara-Western Direction oil pipeline by the SPFU. In 2014-2015, the Rivne Commercial Appeal Court and the Supreme Commercial Court upheld this decision.

However, in 2017, the Commercial Court of Rivne Region changed its decision, recognizing the ownership rights of the Ukrainian part of the oil pipeline in favor of the subsidiary company of "Transnefteproduct" – "PrikarpattiaZakhidTrans". Subsequently, the appellate and cassation instances upheld this decision.

In 2017, the National Anti Corruption Bureau(NABU)and the Specialized Anti-Corruption Prosecutor's Office (SAPO) launched an investigation of the ownership transfer to the Ukrainian part of the pipeline. According to the NABU, a new decision of the Rivne Commercial Court was based on a deliberately false forensic engineering and technical expertise.

As part of the investigation, NABU detectives and SAPO prosecutors appealed to the court to arrest the Ukrainian part of the oil pipeline. In February 2021, the High Anti-Corruption Court upheld the claim. Since 2021, this asset has been managed by JSC Ukrtransnafta.

Simultaneously with the NABU and SAPO investigations, the SPFU made another attempt to return the Ukrainian part of the oil product pipeline to state ownership. In 2021, the State Property Fund appealed to the Commercial Court of Zhytomyr Region, asking the court to recognize the asset as state property. In late June, the court upheld the SPFU's claim.