NEGATIVE OPINION ON THE APPROVAL OF THE MEMORANDUM WITH ROMPETROL, IN THE ECONOMIC COMMISSION IN THE SENATE Nazare-Eugen Ţapu, of the Senate: "Rompetrol must pay its debts to the Romanian state"

Senators of the Economic, Industry and Services Commission have voted against the draft law to approve the Memorandum of Understanding between the Romanian state and The Rompetrol Group N.V of February 15th, 2013.

Nazare-Eugen Ţapu, the president of the Commission told us: "We issued a negative opinion because all that memorandum has been declared unconstitutional by the Constitutional Court. It was a really "transparent" deal, from the very beginning. «We are going to cancel the debts of Rompetrol to the Romanian state and we are going to create a Romanian-Kazakhstan investment fund», some said. That fund hasn't been created to this day.

Normally, Rompetrol needs to pay off its debts to the Romanian state and not look for tricks".

In November 2013, the Constitutional Court declared the overall law unconstitutional, after being notified by president Traian Băsescu, and the MPs sent it in for reexamination.

Just two years later, on February 16th, 2016, the Economic Policies Commission and the Legal Commission of the Chamber of Deputies drew up a common report, whereby they rejected the law. The plenum of the Chamber of Deputies only voted the rejection of the law on July 8th, which the Senate is the decision-making forum for.

The route of the re-examination of the law seems to have picked up steam lately in the Parliament, just like the activity of the DIICOT prosecutors, who, in May have launched a new investigation into the privatization of the Petromidia refinery.

The DIICOT has announced that is has seized 3 billion lei of goods and assets of "KazMunayGaz International NV" (formerly The Rompetrol Group NV), "Oilfield Exploration Business Solutions" (formerly "Rompetrol") and "Rompetrol Rafinare", in a new "Rompetrol" case, severed from the 2006 case against Dinu Patriciu, along with other individuals.

Information subsequently appeared that the DNA was investigating former prime-minister Victor Ponta concerning the Rompetrol memorandum.

What is strange is that in July, meaning immediately after the rejection of the Rompetrol memorandum in the Chamber of Deputies, energy minister Victor Grigorescu said that the Company for the Management of Investments in Energy (SAPE) would handle the creation of the one billion dollar investment fund, together with Rompetrol, as is stipulated in the memorandum signed in 2013.

When asked if it was possible to proceed, as the 2013 memorandum was being investigated by the DNA prosecutors, Victor Grigorescu said that the interest of the Ministry of Energy is for the "liabilities stipulated in the legislation in effect" to be paid. According to the minister, the liabilities taken on had nothing to do with the prosecutors' investigation.

When asked, in May, whether the prosecutors' investigation could be extended to the memorandum as well, KMG Internaţional vice-president of Azamat Zhangulov answered: "If we are talking about the possibility, yes, it exists". But he said that ministers have constantly been replaced but no one has raised any doubts over the deal made with the Romanian government. "Even in the Ministry of Energy there have been several ministers. Not one of them has stated that this deal was not OK", said Zhangulov, who added: "That is why we believe that this deal will be executed".

The memorandum of understanding with Rompetrol, signed on February 15th, 2013, involves the creation of a joint investment fund with 1 billion dollars and the sale to the state of a block of shares of 11,775,349,451 shares, representing 26.6959% of the share capital of Rompetrol Rafinare Constanţa. The memorandum has been adopted through the Government decision of January 22nd, 2014, amended on July 15th 2015.

At the end of July, the management of KazMunayGas has announced that it intends to go to the international courts, if the disagreements with our authorities aren't amicably resolved in the next 3-6 months. The arbitrage disagreement concerns the treatment that the Romanian authorities gave the investments made by KazMunayGas NC and KMG International in its Romanian subsidiaries.

National Company JSC KazMunayGas (KMG) and KMG International NV (KMGI) sent a notification to the Romanian authorities based on the treaties concerning the protection of investments - based on the provisions of the Agreement between the Government of Romania and the Government of the Kazakhstan Republic, of the Agreement between the Kingdom of Netherlands and the Romanian Government and the Treaty of the Energy Charter. The sending of the notification formulated based on the treaties concerning the protection of investments represents the first procedural step that could lead to an arbitrage dispute between an investor and the country in which they have made the investment.

The letter sent by the KazMunayGas companies to the Romanian government details the seizing of assets of more than 2.1 billion dollars and the company's conviction that the authorities actually intend to seize and nationalize the company's assets.

Azamat Zhangulov said that the seizure ordered by the DIICOT on the company's assets and the fact that certain transactions can't be performed lead to the accrual of losses that the company will try to recoup from the Romanian state in court.

At the end of April, KazMunayGas signed a deal with Chinese company CEFC to sell 51% of the shares of KMG International, in which it is a majority shareholder, for 680 million dollars. A few days later, the DIICOT prosecutors have seized the Petromidia refinery and the movable and immovable assets of KazMunayGas International NV, SC Oilfield Exploration Business Solutions SA and SC Rompetrol Rafinare SA, in order to recoup the amounts of 1,724,168,825 lei, 290,786,616 dollars and 34,941,924 Euros, in the Rompetrol II case.