Naftogaz To Invest In Downstream Development

Naftogaz’s subsidiary Ukrgazvydobuvannya announced yesterday that it will increase refining capacities at the Shebelinka gas processing plant (Shebelinka GPP) by 60% to 1.6 mln mt in 2006. In addition, the company will create a chain of 150 gas stations via the acquisition of existing facilities and building new units to sell oil products made at the Shebelinka GPP. Currently, the company operates a network of gas stations under jobbing agreements and has an 8% market share in the retail oil products market. Ukrgazvydobuvannya will dispose of the jobbing schemes after it creates a network of its own stations. Concorde Capital: The government needs to have more levers to influence the oil product market via market means, which is why it is developing a downstream segment for Naftogaz. This will increase competition in the market in the medium term, but the effect will not be significant for both Ukrnafta (UNAF: HOLD) and Galnaftogaz (GLNG: BUY).