Ukraine delays hike in royalties on gas production

Ukraine’s government took off the agenda the draft law which called for a 4-fold increase in royalties on production of natural gas in Ukraine (refer to our news from April 10 for more details). The reasoning behind the decision is that the document needs some additional work, and the hike would contradict some promises given to potential investors into Ukrainian gas sector.

Vitaliy Vavryshchuk: The news is encouraging as it gives hope that government will either go away from the idea of raising royalties or will go ahead with a much less substantial increase. Following release of the news, we expect some recovery in share prices of local private oil & gas producers JKX Oil & Gas (JKX LN), Regal Petroleum (RPT LN), Cadogan Petroleum (CAD LN) and Kulczyk Oil Ventures (KOV PW), which lost 2-6% over the week after rumors of a planned hike of royalties had leaked into the market.