Oil Extraction Royalties To Go Up 83% On August 1, 2005.
8 July 2008
The royalties will constitute USD 108.9 per mt, nearly USD 14.86 per bbl. The proceeds from the royalties will be used to repay salary arrears to coal miners and to fund social asset restructuring in the power industry. Concorde Capital: Industry cross-subsidization is a logical move by the government, which is trying to fulfill its campaign promises. Yet additional royalties will be a burden for the Ukrainian oil & gas industry and if not lowered in 2006, may severely harm the industry in the medium term. This will be a blow to Ukrnafta (UNAF: BUY). Yet, the additional upstream burden will spur Ukrnafta to finalize its VIOC transformation so that if upstream operations worsen it will not cripple the company?s business.
