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Executive director Yuriy Vitrenko writes on Facebook. The lack of storage capacity and weak demand, pushed June prices for Brent down to $19.76/barrel and for West Texas Intermediate to $11.60. “Sellers are willing to pay extra to have their oil taken away,” the state energy company executive writes. “This can be explained by the fact that there is nowhere to store the oil, and it is impossible to stop production without significant losses.” Naftogaz offers EU companies 10bn cubic meters of gas storage in its western Ukraine reservoirs.
Fitch Ratings has affirmed National Joint Stock Company Naftogaz's (Naftogaz) Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'B' with a positive outlook. The rating is upheld since September 2019 and is equalised with the sovereign rating of Ukraine (B/Positive), as the company has strong linkage with sovereign. In its statement Fitch discusses a number of drivers, including strategic importance of Naftogaz, expected profitability, FX risks, gas transit business unbundling, regulatory risks and focus on domestic market.
At the end of March, the Cabinet of Ministers of Ukraine supported the decision of Naftogaz's Supervisory Board to extend the contract with Andriy Kobolyev as the group's CEO. The contract has been prolonged by four years till March 2024. The government named the following operating priorities for Mr. Kobolyev: maintain solid cash generating ability of Naftogaz, decrease Ukraine’s reliance on imported gas through gas production and energy efficiency, as well as expand the group’s proved and probable reserves. The government also named the preparation of Naftogaz to a potential public listing in the medium term among Mr. Kobolyev’s priorities during his renewed tenure.
Naftogaz prepares for a gas market liberalization expected to start on 1 May 2020 when temporary regulated terms set by the government expire.
JKX Oil & Gas reported it produced 10,996 boepd of hydrocarbons in 1Q20, which is flat y/y and 11.0% more qoq, the company reported on April 15. In Ukraine, the company produced 5,636 boepd, which is 6.5% less y/y and 7.0% more qoq. JKX has commissioned in March a new IG-143 well producing now 539 boepd of hydrocarbons, and has completed a side track of two more wells, whose testing is ongoing. The company has no other drilling plans for 2Q20. In Russia, JKX produced 5,635 boepd, which is 7.2% more y/y and 15.6% more qoq, with no new wells planned here. As of end-March, the company reported its cash balance amounted to $14.2mn, which is comparable to its net cash as of end-December ($20.6mn in cash and $5.8mn in debt due in February). JKX confirmed its debt-free status as of end-March.
9.2.2 Automotive corporate news
Germany’s Bader GmbH is resuming production in Lviv of leather seats for high end German cars -- Audi, BMW, Mercedes, and Skoda. Work stopped March 23, partly due to Ukraine’s quarantine and partly due to falling orders from Germany. By May 4, all workshops should be back in production, Kristina Gorishna, deputy director of Bader Ukraine, tells Interfax-Ukraine.
Germany’s Kostal Group is to invest €39mn to build an auto electronics plant in Dudarkiv, 15 km north of Kyiv Boryspil airport. Construction starts in
60 UKRAINE Country Report May 2020 www.intellinews.com
