Business news from Ukraine

COUNTRY’S LARGEST GAS PRODUCING COMPANY UKRGAZVYDOBUVANNIA SEES 11% FALL IN NET PROFIT

JSC Ukrgazvydobuvannia saw an 11% fall in net profit in 2018, to UAH 27.135 billion (around $1 billion).
According to the financial statements audited by Deloitte and posted on the company’s website, net revenue in 2018 grew by 5.2%, to UAH 78.97 billion, while gross profit fell by 8.8%, to UAH 38.368 billion.
In 2018, the company saw revenue from sale of natural gas and oil in the amount of UAH 69.825 billion (a rise of 3.7% on 2017), from sale of refined petroleum products – UAH 8.465 billion (a rise of 21.4%), fossil fuel extraction and preparation services – UAH 220.216 million (a fall of 31.6%), and other goods and services – UAH 459.661 million (a rise of 3%).
The royalty for the use of subsoil and other taxes in 2018 was UAH 25.268 billion (a rise of 13.4% year-over-year), depreciation totaled UAH 9.84 billion (a rise of 47.7%), staff costs and social payments came to UAH 3.007 billion (a rise of 34.4%), and other costs – UAH 2.487 billion (a rise of 35.2%).
As reported, Ukrgazvydobuvannia increased production by 1.2% (by 176.2 million cubic meters), to 15.42 billion cubic meters in 2018.
Ukrgazvydobuvannia, fully owned by Naftogaz Ukrainy, is the country’s largest gas producing company, providing about 75% of the country’s total gas production.

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UKRGAZVYDOBUVANNIA PLANS TO CONDUCT OVER 100 HYDRAULIC FRACTURING OPERATIONS

JSC Ukrgazvydobuvannia plans to conduct over 100 hydraulic fracturing operations and extract an additional 500 million cubic meters of gas thanks to them, the company’s press service has reported.
Ukrgazvydobuvannia said that from September 2016 through February 2019 a total of 330 hydraulic fracturing operations were conducted.
“Since the beginning of 2019, Ukrgazvydobuvannia has significantly increased the number of works on hydraulic fracturing and performed 40 operations within two months, which is 90% higher than the same period last year,” the company said, adding that the increase in production intensification operations enabled it daily production increase in January-February 2019 at the level of the first four months of 2018.

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TWO NEW CHINESE DRILLING RIGS FOR UKRGAZVYDOBUVANNIA ARRIVE IN UKRAINE

Two new drilling rigs with a carrying capacity of 450 tonnes from China’s Sichuan Honghua Petroleum Equipment arrived in Odesa seaport late on Monday, the press service of JSC Ukrgazvydobuvannia has reported.
Ukrgazvydobuvannia Board Chairman Oleh Prokhorenko said that as of 2016, the average age of drilling rigs of the company was 23, and the average age of drilling rigs in Russia was 10 years and in Belarus – nine years.
“Finally, Ukraine has begun to invest in the development of its own gas production, its own drilling fleet and the exploration of its own resources. The arrival of these new drilling rigs is one of many concrete steps that will increase gas production in Ukraine,” he said.
As reported, late 2017, Ukrgazvydobuvannia signed a contract with Bentec GmbH Drilling & Oilfield Systems (Germany) to supply five drilling rigs with a capacity of 450 tonnes (2,000 HP) for $110 million. The first rig was delivered to the company in October 2018.
It is also planned to buy ten Chinese drilling rigs with a capacity of 450 tonnes.

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SCHLUMBERGER TO PROVIDE SERVICES FOR $92 MLN TO STATE-RUN UKRGAZVYDOBUVANNIA

Schlumberger Services Ukraine LLC will provide coiled tubing (CT) services, including high-tech services using CT drilling rig and engineering support, for $92 million to JSC Ukrgazvydobuvannia. According to a report of Naftogaz Ukrainy, the respective contract, which is to be implemented in the next three years, was signed with Schlumberger Services Ukraine in October 2018. One CT drilling rig has been shipped to Ukraine and is ready to be exploited at wells of Ukrgazvydobuvannia.
“Ukrgazvydobuvannia expects to improve its technological expertise and enhance the production of hydrocarbons using highly efficient CT services and other technologies provided by Schlumberger,” the company said.
In addition, Naftogaz and Ukrgazvydobuvannia intend to further enhance their strategic technology collaboration with Schlumberger Services Ukraine LLC in drilling, hydraulic fracturing, hydraulic stimulation, software development and 3D modeling, as well as the provision of advanced equipment and software solutions. The companies have signed the respective memorandum of understanding.
Naftogaz said that this collaboration with Schlumberger will give Ukrgazvydobuvannia and Naftogaz access to high-technology solutions to help deliver their Strategy 20/20 goals.
Schlumberger is the world’s leading provider of technology for reservoir characterization, drilling, production, and processing to the oil and gas industry.

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UKRGAZVYDOBUVANNIA WINS AT AUCTION TO USE CONDENSATE FIELD FOR UAH 15 MLN

JSC Ukrgazvydobuvannia has been announced a winner of the auction held by the State Service for Geology and Deposits to sell a license for the use of Lypovetske gas condensate field (Lviv region). The company offered UAH 15.1 million for the license.
The authority reported that the sum is more than four times larger than the starting price – UAH 3.5 million.
Stryinaftogaz LLC (the founders of the company are Petro Hryniv, Oleh Kurochkin and Yuriy Petrushko) won at an auction to receive the license for the Chernystia gas condensate field (Lviv region). The company offered UAH 2.04 million for the license.
Five more companies participated in the auction.
This was the first auction to sell licenses for the use of oil and gas field in the past two years. Ukrgazvydobuvannia said that for the company it was the first auction in the past 10 years.

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EBRD COULD PROVIDE EUR 51 MLN LOAN TO UKRGAZVYDOBUVANNIA

The European Bank for Reconstruction and Development (EBRD) is mulling a project to provide a debt funding of EUR 51.9 million to PJSC Ukrgazvydobuvannia to finance the procurement of workover rigs and a package of energy efficiency investments.
According to a report on the bank’s website, the Board of Directors will discuss the project on December 12, 2018.
According to the document, the loan will benefit from a sovereign guarantee by Ukraine.
Ukrgazvydobuvannia, fully owned by Naftogaz Ukrainy, is the country’s largest gas producer, which provides about 75% of the total gas production in the country.
As reported, the EBRD recently defined operational and strategic priorities in Ukraine for the next five years: privatization and improved governance in the public sector, energy security and energy efficiency.
The EBRD is the largest international financial investor in Ukraine. To date, the bank has made a cumulative commitment of almost EUR 12.1 billion across some 400 projects since the start of its operations in the country in 1993.

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