NJSC Naftogaz Ukrainy plans to make profit based on the results of its activities in 2021-2024, the press service of the company has told Interfax-Ukraine.
Earlier, the Ministry of Finance of Ukraine published a report on fiscal risks and their impact on the state budget, in which it predicted that under the baseline scenario, Naftogaz will receive losses in the amount of UAH 4.3 billion in 2020, and UAH 7.5 billion in 2021, UAH 5.5 billion in 2022, and UAH 4.4 billion in 2023. According to the optimistic scenario for 2020-2023, the Ministry of Finance also expects extremely unprofitable activities from Naftogaz.
At the same time, Naftogaz notes that the draft financial plan assumes profitable activities in 2021-2024. The process of updating forecasts for 2021-2025 is underway.
“Like any other company, Naftogaz must consider the impact of the pandemic on our operations, the markets in which we operate, and on our customers. There are several important factors that can affect the results, but are outside the company’s control. This is the impact of the pandemic on the demand for energy in Ukraine and in the world, the severity and duration of quarantine, the resolution of the problem of accumulated debts of market participants, payment discipline, etc.,” the press service said.
“We are closely following Ukrainian and world statistics, recommendations of the leading analysts and legislative initiatives in the preparation and adjustment of our actions. So, despite the market situation, in the first half of the year we initiated a revision of capital and other costs to reduce expenses and increase efficiency,” the company said.
As reported, Naftogaz Ukrainy posted net loss in January-June 2020.
Naftogaz has begun pilot operation of the energy trading and risk management system (ETRM).
“This product accelerates business decision making by creating a unified database of counterparties, contracts and agreements and real-time data exchange between the functions of front, middle and back offices, as well as security, compliance, risk management and financial control. This helps increase efficiency, transparency and control over gas trading operations, as well as improve the management of commercial risks and the quality of management decisions,” the statement says.
Naftogaz notes that thanks to the introduction of this system, it takes 15-20 minutes to negotiate a contract for the sale or purchase of gas, while earlier this required several days and about 20 signatures.
The TRMTraker system from Pioneer Solutions LLC was chosen to implement ETRM. Subsequently, the ETRM solution can also be introduced for trading in electricity, oil and petroleum products.
“Now Naftogaz Commerce can systematically analyze the risks of trading positions and accelerate the support of signing transactions, and at the subsequent stages of implementation analyze settlements with counterparties and simulate the state of the gas portfolio subject to changes in prices, exchange rates, volumes of gas production and consumption,” the company said.
Naftogaz plans to focus its efforts on the growth of new hydrocarbon resources and, for this purpose, increases the role of the geological direction, the director of the Exploration and Production division of the group, Oleksandr Romaniuk, has said in an interview with Interfax-Ukraine.
“It all starts with geology. We want to create the best geological expertise in the region, we believe that we can do it. We have a strong geological school, which began to be supported by legionnaires, including our guys who worked in Western companies. We now have a new head of the geological direction, who grew up in foreign oil and gas companies. But we do not need expertise for the sake of expertise. We want to radically change the situation with the resource base, so we are changing the structure,” he said.
According to him, in order to gain access to all available geological information and developments of scientists, the group signs agreements with Nadra Ukrainy, the Ukrainian State Geological Research Institute, the Institute of Geological Sciences of the National Academy of Sciences of Ukraine.
“In addition, we attract external expertise, which will help structure and more correctly determine the goals. We have created an expert council on the basis of the division, which attracted people who built the industry and have unique knowledge about Ukrainian subsoil,” Romaniuk added.
The top manager of Naftogaz noted that the group’s priorities are areas where it is possible to increase proven reserves from 50 billion cubic meters, since the company’s existing resource base does not compensate for the natural decline in production.
NJSC Naftogaz Ukrainy and its member companies paid UAH 77.9 billion in taxes and fees to the state budget in January-July 2020 (including the balance of dividends for 2019), the company’s press service has reported.
According to the report, revenues from the group amounted to more than 17% of the total state budget revenues for the specified period.
As reported, NJSC Naftogaz Ukrainy and its member companies paid UAH 121.4 billion in taxes and dividends to the state budget in 2018.
Naftogaz Ukrainy unites the largest oil and gas companies in the country. It is a monopoly for storing natural gas in underground storage facilities, as well as for transporting oil by pipeline across the country.
The Cabinet of Ministers on Wednesday intends to consider a bill on the list of 188 companies prohibited from privatization, according to the agenda of the government meeting. According to the text of the bill, the government allows the privatization of up to 50% of the shares of Naftogaz, Ukrzaliznytsia and Ukrposhta, but proposes to retain the state’s 100% share of corporate rights in National Nuclear Generating Company Energoatom, PrJSC Ukrhydroenergo, NEC Ukrenergo , Skhidny Ore Mining and Processing Plant (VostGOK), and Ukrainian Sea Ports Authority (USPA).
It is also proposed to include the SE Market Operator and the SE Guaranteed Buyer, created by the Cabinet of Ministers in 2019 in order to ensure the operation of the new electricity market, in the list of objects completely prohibited for privatization.
In addition, it is proposed to include in the specified list the state-owned enterprise Document, Ukraina Printing Plant for the production of securities, Kyiv offset factory, and Pivdenne (Yuzhne) Design Bureau.
Naftogaz Ukrainy, following the results of its activities from providing natural gas transit services in January-March 2020, received a positive EBITDA (profit before interest, taxes and depreciation) of UAH 372 million, according to consolidated unaudited statements published on the company’s website.
At the same time, the net income of the company from transit services in January-March 2020 amounted to UAH 10.382 billion.
In turn, according to the report of Gas Transmission System Operator of Ukraine LLC (GTSOU) for the first quarter of 2020, its net income amounted to UAH 14.715 billion (includes not only transit revenues, but also those from provision of internal transportation services).
As reported, the transit contract concluded in 2009 between Naftogaz Ukrainy and Gazprom expired on the morning of January 1, 2020. A new agreement between the companies on the organization of transportation, a transport agreement between Naftogaz and GTSOU, as well as an inter-operator agreement between GTSOU and Gazprom were signed on December 30, 2019.
