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    Naftogaz Vows to Continue Challenging Loss of Licences


A licence for one of the blocks Naftogaz lost rights to has now been sold to another company at auction.

by: Joseph Murphy

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Naftogaz Vows to Continue Challenging Loss of Licences

Ukraine's national gas producer Naftogaz said on August 31 it would continue challenging the cancellation of three of its subsoil licences by authorities, after one was sold at auction to another company.

Ukraine's state geological service (Gosgeonadra) suspended Naftogaz's licences for the Budyshchansko-Chutivska, Obolonska and Pysarivska blocks in 2017. But it did so without verifying whether Naftogaz had carried out its work obligations, according to the company.

Gosgeonadra based its decision on a corresponding one by the Poltava regional council, which Naftogaz said contained no substantiations and supporting documents, but was instead based on "unfounded and biased appeals" of individual members of the council.

Gosgeonadra sold 20-year rights to the Budyshchansko-Chutivska site on August 31 to another company called Naftogazgeorozvidka for hryvnias 650.5mn ($23.7mn) – almost eight times the starting price for bids. The block holds 2.73mn mt of oil and 856mn m3 of gas, according to the subsoil agency.

Reports in the Ukrainian press claim Naftogazgeorozvidka is owned by Dtek, the largest private group in Ukraine controlled by billionaire Rinat Akhmetov.

Naftogaz invested almost hryvnias 1bn in developing the three sites between 2011 and 2016, it said, spending hryvnias 750mn at Budyshchansko-Chutivska alone. Its work at the block included 3D seismic and other surveys, and the drilling of three wells which found three fields.

"The decision of [Gosgeonadra] to revoke the company's special permits is unlawful. Naftogaz will continue to challenge this decision in the courts," the company said.