Business news from Ukraine

Business news from Ukraine

“Cherkasyoblenergo has allocated more than UAH 140 mln to support Armed Forces of Ukraine (AFU).

PJSC Cherkasyoblenergo has allocated UAH 142 million to support the Armed Forces of Ukraine (AFU) since the beginning of the full-scale Russian invasion.

“UAH 120 million is direct assistance to military units, another UAH 22 million are payments to employees defending Ukraine as part of the AFU,” the company said in a press release on Thursday.

It is specified that the total amount of assistance for 700 days of the big war is more than 20 cars, 3 pickup trucks, more than 20 quadrocycles, almost 50 quadrocopters, more than 70 thermal imagers, 18 thermal sights, 20 optical devices, more than 60 gasoline and diesel generators, chainsaws, intercom radios, solar panels, kamikaze drones, equipment, medical drugs and devices and other necessary things.

In addition, the company also makes monthly payments of 10 thousand UAH of material aid to 156 employees of the company who defend Ukraine as part of the AFU. In 2023, the company paid a total of about 22m hryvnias of such assistance.

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Ostchem plants increase fertilizer production by 19.51%

In 2023, the plants of Ostchem, a nitrogen holding company that unites Group DF’s nitrogen business, produced 2.1 million tons of mineral fertilizers, up 19.51% year-on-year.

According to a Group DF press release, Azot, the group’s Cherkasy-based plant, produced 1.56 million tons of mineral fertilizers in 2023, up 39.63% year-on-year, while Rivne Azot produced 528 thousand tons (-10.81%).

Urea, UAN and ammonium nitrate were the key fertilizers produced by Ostchem’s businesses, Group DF said.

According to the group, in 2023, it produced 835.9 thousand tons of ammonium nitrate, up 60.47% year-on-year, UAN – 572.7 thousand tons (+130%), and urea – 447.1 thousand tons (+145%). Production of UAN, a traditionally exported fertilizer produced by Rivne Azot, halved to 102 thousand tons.

“The fertilizer market is recovering, but imports of nitrogen fertilizers, which have increased significantly, do not allow us to fully utilize our plants. Despite the difficult situation in the agricultural sector, forced shutdowns of plants due to the hostilities, still high gas prices and abnormally high volumes of imports to Ukraine at dumping prices, Ostchem started to restore production in 2023. We fully met the demand from farmers even during peak periods,” said Sergiy Pavliuchuk, Production Director of Ostchem’s nitrogen business.

In 2023, Ostchem Holding doubled its production of UAN, the most promising fertilizer in Ukraine, to meet the demand. UAN was ranked second in terms of production, and its share in Ostchem’s product portfolio amounted to 27.3%, according to Group DF.

“It is no secret that we are negotiating with global players to develop several industrial sites. Our strategic plans include the construction of new workshops and enterprises. We are talking about investing in new, energy-efficient fertilizer production facilities and launching new products such as AdBlue, industrial gases, and petrochemicals,” added Pavliuchuk.

Commenting on the state of the domestic fertilizer market in Ukraine, Group DF said that the main feature of 2023 was the critical growth in imports imported at dumping prices. Compared to 2022, imports of mineral fertilizers to Ukraine increased 1.9 times, reaching 1.99 million tons. For example, urea imports increased 3.7 times over the year, reaching 501 thousand tons.

“A huge flow of cheap Belarusian and Russian fertilizers enters Ukraine through two channels: the first is from the former Soviet Union countries friendly to the aggressor. The second new channel is the re-export of Belarusian and Russian fertilizers from the EU. According to Eurostat, the total volume of nitrogen fertilizer imports to the EU increased by 34% in 2022-2023, while Russia accounted for about a third of these imports. Despite the sanctions and the existing embargo, a significant portion of these fertilizers is also entering Ukraine, slowly “killing” the Ukrainian producer and Ukrainian jobs,” emphasized Oleg Arestarkhov, Group DF’s Head of Corporate Communications.

In his opinion, the new trend is driven not only by Russia’s desire to expand its sales markets, but also by its strategic plan to make the EU and Ukraine dependent on its fertilizers.

Unable to compete with cheap imports, many EU companies are shutting down, and Ukrainian chemical companies such as Odesa Port and Sumykhimprom are also idle.

“The US and EU countries have already developed measures to ‘reduce dependence’ on fertilizers, grain and other food products from Russia. Formally, Ukraine has an embargo on imports of Russian and Belarusian fertilizers. However, fertilizers from these countries, as well as countries that buy cheap gas from Russia, continue to be supplied. As a result, our market is flooded with cheap imports, and Ukraine is facing critical dumping. Unfortunately, in 2023, we did not see any clear, tough economic actions by the authorities to protect the Ukrainian market and national producers. Fertilizer imports to the country are growing much faster than domestic production. Domestic production grew by about 20%, while imports grew by almost 100%,” stated Arestarkhov, adding that Ukraine needs to learn to better protect its interests.

Group DF consolidates Dmitry Firtash’s assets in the gas distribution, chemical, titanium and port industries, as well as in agriculture and media.

Ostchem is Group DF’s nitrogen holding company that unites the largest mineral fertilizer producers in Ukraine. It includes Rivne Azot, Cherkasy Azot, as well as Sievierodonetsk Azot and Stirol, which are not operating and are located in the occupied territories.

Cherkasy Azot PrJSC (Cherkasy, Ukraine) is one of the largest Ukrainian chemical companies and has been part of Group DF’s nitrogen business since 2011. The design production capacity of Cherkassy Azot is 962.7 thousand tons of ammonia, 970 thousand tons of ammonium nitrate, 891.6 thousand tons of urea, and 1 million tons of UAN per year.

Rivne Azot is one of the largest Ukrainian chemical companies in Western Ukraine and has been a part of Group DF’s Ostchem nitrogen holding since 2011. Since its acquisition, Firtash has invested over UAH 1.3 billion in Rivne Azot.

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“UZ” built 528 freight cars, increased production of crushed stone, sleepers and reinforced concrete structures

In 2023, Ukrzaliznytsia JSC (UZ) built 528 freight cars at its own facilities, which was a record figure for the last five years, the company’s press service said on Thursday.

It is noted that, in particular, 427 fitting platforms were manufactured. The company also started mass production of 50 dump cars and 50 hopper dispensers.

In addition, in 2023, at its own facilities, UZ built a grain carrier adapted for transportation on a 1520 mm gauge with a 1435 mm European gauge conversion. Most of the components and materials used for its construction were produced in Ukraine, the report says.

In 2023, UZ enterprises also increased the production of crushed stone by 33% (to 2.7 million tons) and sleepers by 6% (to 867 thousand units).

The production of reinforced concrete structures increased by 10.5% compared to 2022, to 6,937 thousand cubic meters, which was also a record for the last five years.

Among other things, last year UZ launched 47 new product lines. The company manufactured 37 thousand units of various products: girders and side girders, container stops, brake shoes, shock absorbers for the absorber, aluminum door frames, compressors, and generators for passenger cars. This allowed the company to save about UAH 120 million on external procurement, the company says.

“Plans for 2024 include a 15% increase in the volume of overhauls of locomotives at UZ plants and 8% increase in the volume of electric trains, an increase in crushed stone production through orders from third-party customers, and the development of new products and technologies,” Ukrzaliznytsia said in a statement.

Earlier, UZ announced the launch of a freight car fleet renewal program. The company planned to build 1,496 thousand freight cars in 2022 at its own car repair plants – Panyutyn, Darnytsia and Stryi: 1,446 thousand gondola cars and 50 grain carriers.

It was also reported that on December 28, 2021, the Ministry of Justice registered the order of the Ministry of Infrastructure No. 647, which launched a large-scale program to renew the freight car fleet of Ukraine in the period 2022-2031, introducing a phased limitation of their service life in a loaded state for as long as 10 years and bringing this period to the standard. The service life of gondola cars is reduced from 44 years to 22 years, and that of grain carriers from 45 years to 30 years.

In addition, this initiative envisaged the launch of a railcar construction program at Ukrainian railcar manufacturers. The volume of investments in the railcar industry was estimated at over UAH 120 billion.

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“Ukrnafta” plans to conduct 3D seismic surveys

In 2024, PJSC Ukrnafta plans to conduct 3D seismic surveys in the west and east of the country in areas with a total area of 320 square kilometers.

“In 2024, seismic surveys in the West are planned to cover 200 square kilometers at several license areas. In the eastern region, 3D surveys are planned at three fields with a total technological area of about 120 square kilometers,” the company said in a press release on Wednesday.

According to the company, Ukrnafta’s specialists will be able to create the most accurate geological models of the facilities and successfully drill new wells to increase production.

Currently, the company is conducting large-scale 3D seismic surveys in the west of the country over an area of 77 square kilometers.

“Modern technological equipment is used there – a wireless system with almost 19 thousand accelerometer sensors that work simultaneously,” the document says.

In the east, 98 square kilometers are being surveyed using a cable data logging system that includes 6,000 geophones (4,320 sensors are working simultaneously).

“Since both areas have difficult surface conditions – mountains in the West and wetlands, forests and rivers in the East – a combination of different types of sources: vibration and explosive, is used to minimize the loss of primary information and achieve the best possible results,” the company said.

As reported, in 2023, Ukrnafta increased oil and condensate production by 3% (+39.9 thousand tons) compared to 2022 – up to 1 million 409.9 thousand tons, gas production – by 5.8% (+60.4 million cubic meters), up to 1 billion 97.4 million cubic meters.

“Ukrnafta’s strategic goal is to double its oil and natural gas production to 3 million tons and 2 billion cubic meters by 2027, respectively.

“Ukrnafta is Ukraine’s largest oil producer and operator of a national network of 537 filling stations, of which 456 are in operation.

Ukrnafta’s largest shareholder is Naftogaz of Ukraine with a 50%+1 share. On November 5, 2022, the Supreme Commander-in-Chief of the Armed Forces of Ukraine decided to transfer the corporate rights of the company owned by private owners, which is now managed by the Ministry of Defense, to the state.

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2022-2024 goods trade balance forecast (USD billion)

2022-2024 goods trade balance forecast (USD billion)

Source: Open4Business.com.ua and experts.news

“Prozorro.Sales” presented rating of most active cities

The annual ranking of cities that were most active in realizing their assets on “Prozorro.Sales” in 2023 was headed by Zolotonosha in Cherkasy region, Balta in Odessa region and Kyiv, according to a release on Wednesday.

“State online auctions in 2023 helped earn at least 1.6 billion hryvnia to local budgets. This is an example of how increasing the capacity of each individual city or town brings us closer to the recovery of the country’s economy as a whole,” Deputy Economy Minister Oleksiy Sobolev said.

In total, the rating included 26 cities, the total income of communities of which amounted to almost 1 billion UAH.

“Local governments today are the drivers of change on the ground, many of them are actively involved in the programs implemented by the Ministry, aimed at business development. At the same time, communities have a great potential, which they can realize independently, successfully selling and leasing communal real estate and land through “Prozorro.Sales”, – added Sobolev

According to the CEO of “Prozorro.Sales” Sergey Buta, compared to the first year of full-scale invasion, in 2023 several dozen more cities returned to the realization of assets through the state online auctions “Prozorro.Sales”.

“A total of 334 territorial communities worked with the system in 2023, which announced more than 7.3 thousand successful bids for small privatization, leasing of communal property and leasing and sale of land. And this is an opportunity for communities to independently generate revenues to their budgets and attract businesses that buy and lease communal assets,” Bute added.

It is specified that local governments in Zolotonosha successfully held 61 auctions out of 78 announced last year. Thanks to online auctions the local budget received almost UAH 1.9 mln. 168 successful auctions brought Balta more than UAH 23.3 mln, and the capital budget in 2023 was replenished by more than UAH 141.4 mln following the results of almost half a thousand auctions.

Lutsk and Lubny were also in the top five cities with high efficiency of property management through online auctions: their city budgets earned more than UAH 12.5 million and almost UAH 4.8 million respectively from the sale of municipal assets.

Chernivtsi, Dnipro, Ternopil, Lviv and Kremenchuk formed the second five of the rating according to the results of 2023.

According to “Prozorro.Sales”, Lviv, which took the ninth place, attracted the most funds in the system among all cities last year: small privatization, rent and land brought almost UAH 160.4 million to its budget.

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