28 March 2019, Thursday, 17:58 151

Ukrnafta Shareholders Approve Sale Of 4.062 Billion Cubic Meters Of Gas To Naftogaz

Редактор: Daria Zubkova

The shareholders of the Ukrnafta company, the largest oil producer in Ukraine, approved conclusion of agreements for sale of 4.062 billion cubic meters of natural gas to the Naftogaz of Ukraine national joint stock company on March 28.

The Naftogaz of Ukraine national joint stock company announced this in a statement, Ukrainian News Agency reports.

According to the statement, an independent expert from LLC KPMG Ukraine confirmed that the terms of these agreements complied with standard market terms.

The agreements provide for Naftogaz of Ukraine to purchase 2.062 billion cubic meters of gas, which corresponds to the volume of gas that entered the gas transmission system from Ukrnafta in the past, as well as 2 billion cubic meters of gas that will be produced in the future.

Ukrnafta will use the money received exclusively for payment of its tax debt, as well as other taxes levied during implementation of the agreements.

As Ukrainian News Agency earlier reported, the board of Naftogaz of Ukraine has decided to return the disputed 2 billion cubic meters of natural gas to Ukrnafta.

The shareholders of Ukrnafta considered conclusion of agreements on sale of 4.062 billion cubic meters of natural gas to Naftogaz of Ukraine at a price to be determined via the Import Parity Price (IPP) formula at an extraordinary meeting on March 28.

Ukrnafta will use the payment for this volume of gas exclusively for full payment of its debts to the state budget, including penalties.

Until 2010, Naftogaz of Ukraine was obliged to sell all the gas produced by Ukrnafta to households at prices regulated by the National Electricity Regulation Commission (NERC).

However, Ukrnafta refused to document the sale of this gas at the time, citing the extremely low selling price, which was not consistent with market parameters.

Subsequently, Ukrainian courts ordered Naftogaz of Ukraine to return the gas based on lawsuits filed by Ukrnafta.

According to Naftogaz of Ukraine’s Board Chairman Andrii Kobolev, Naftogaz of Ukraine is unable to transfer this gas physically because households have already used it.

Ukrnafta produced the 2 billion cubic meters of gas and transferred it into the gas transmission system in 2006.

The Naftogaz of Ukraine national joint stock company owns a 50% plus 1 share in Ukrnafta, Littop Enterprises Limited 13.6%, Bridgemont Ventures Limited 13.6%, and Bordo Management Limited 12.9%.

Other shareholders own 9.9% of the shares in the company.