Ukrnafta stops production at four licensed fields in Sumy region

Ukraine’s leading crude oil producer Ukrnafta (UNAF
UK) has stopped oil and gas production at four deposits located in the Sumy
region as of June 27, the company said in a June 26 press release. The stoppage
was prompted by the expiration of the production licenses, which Ukrainian
authorities refused to renew, citing Ukrnafta’s tax debt. The company said the refusal
is unlawful, referring to a respective court ruling.

Before their closure, Ukrnafta was producing 740
tons/day of crude oil and 803 tcm/day of natural gas from the four stopped
deposits. This corresponds to 18% of the company’s total May oil production and
24% of its gas production. Following the stoppage, Ukrnafta’s gas prodcution
declined 21% on June 28, as compared to average production in June 1-25,
Interfax-Ukraine reported.

Ukrnafta’s debt to the state budget amounted to UAH
13.2 bln as of end-2016, which is 31% growth yoy and corresponds to 59% of the
company’s annual revenue.

Alexander
Paraschiy: Ukrnafta continues to suffer
from a corporate conflict between its two key shareholders – the Ukrainian government
and Igor Kolomoisky – with both having profited off by taking some of the
company’s assets and refusing to return them. This license issue merely adds to
our pessimism about Ukrnafta’s future as an integral company.