Ukrainian Producer Comes Out Fighting After 3 Licences Withdrawn
Ukrnafta, one of Ukraine's largest oil and gas producers, has said that it had three of its licences withdrawn by the Public Service of Geology and Mineral Resources of Ukraine (GosGeoNedra), a decision it is taking measures to overturn.
In a statement released on February 12, Ukrnafta said that the licence withdrawals affected the Yuriivske, Golubіvske and Lopushnianske fields. Oil and gas production was ceased at all three fields following the withdrawal it said.
The statement directly criticised GosGeoNedra, saying that the decision undermined Ukraine's interests, employment, and tax revenue.
"The decision of the Public Service of Geology and Mineral Resources of Ukraine is in conflict with state interests and may lead to more than hryvnia 30mn (€1mn) tax underpayment, loss of employment and the stagnation of the Ukrainian oil and gas industry as a whole," it said. "It threatens the state’s energy independence and will also influence the local population, as part of the gas produced at these fields is used by the local community."
Though Ukrnafta did not give any reason for the suspension of the licences, in a separate statement concerning the loss of production, it said that the licences were suspended without any consultation to Ukrnafta by GosGeoNedra. Ukrnafta is legally obliged to cease its operations as a result of the licence withdrawal. "It would be a criminal act to resume production without official permission," Ukrnafta said.
Though the company did not give exact figures, it said that 1100 entities in the Dnipropetrovsk region would be affected by the suspensions.
However, in a third statement released on the same day, Ukrnafta said that it had appealed to GosGeoNedra over one of the licences, the Yuriivske field. As a result of that appeal, it had been granted special permission for oil use at the field.
"In view of public interest and appeal of PJSC Ukrnafta to the Public Service of Geology and Mineral Resources of Ukraine, the decree No. 42 was adopted on 12 February 2016, which makes amendments to decree No. 16 concerning suspension of special permit for oil use at Yuriivske field," the statement said. "The licence was extended until 25 February. Ukrnafta undertakes urgent measures to restore production. We hope the local community will soon receive gas for heating of homes, kindergartens, hospitals, etc."
In its first statement on February 12, Ukrnafta said that it had taken measures to appeal the decision and "to protect its rights in court.
"PJSC Ukrnafta has addressed both the Public Service of Geology and Mineral Resources of Ukraine with a request to abolish the decision, and the Government to intervene," it said.
State Naftogaz Ukrainy owns 51% of Ukrnafta, whose CEO is Mark Rollins, a former executive at BG.
Erica Mills