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9.2 Major corporate news 9.2.1 Oil & gas corporate news
Ukraine’s gas company Naftogaz raises €51.9m to develop gas production and energy efficiency.
Naftogaz Group and the Finance Ministry of Ukraine have concluded a loan agreement with Ukraine's biggest international financial investor, the European Bank for Reconstruction and Development (EBRD). Ukrgasvydobuvannya JSC, which is part of Naftogaz Group, will receive €51.9m from the EBRD for activities aimed at decreasing Ukraine's dependence on imported energy.
Despite the current economic crisis, Naftogaz continues to increase international investment to maintain domestic gas production and improve energy efficiency.
Ukrgasvydobuvannya will use this new funding to upgrade its fleet of workover rigs for operations at gas wells deeper than five kilometers and to introduce energy-saving technology at the Lokachyn field (Volyn region).
The loan will be provided in two tranches of €36.4m and €15.45m. The first tranche is to be repaid within nine years and the second within 15 years. The effective interest rate is almost 2.5% per annum under the current conditions in the international interbank market.
The loan will be secured by the state of Ukraine. The sovereign guarantee costs 1% of the amount used and not repaid.
Procurement within both projects will be made through the EBRD bidding platform according to the Law of Ukraine on public procurement and the bank's procurement principles and rules for public sector projects.
Naftogaz will develop its assets in Egypt instead of selling them, reports the company’s press service. Last December, , the state company announced plans to sell off two oil and gas fields near Alam El Shawish to raise $100mn. Naftogaz Chief Andrei Kobolyev said the SBU opposed the deal. Sergiy Pereloma, first deputy head of Naftogaz “The Management Board and Supervisory Board of Naftogaz have set a clear task for us - the development of assets in Egypt.”
Ukraine’s leading independent oil and gas producer JKX Oil & Gas Plc reported revenue down by 23% y/y to $35.1mn in 1H20, the company said on August 11. The revenue of its Ukrainian assets decreased 28% y/y to $26.8mn mostly on a decrease of hydrocarbon prices, while its revenue in Russia increased 2% y/y as a result of higher hydrocarbon output (up 7% y/y). “The company’s EBITDA decreased 22% y/y, we estimate, to $14.4mn, while the EBITDA margin stood flat y/y at 41%. JKX’s net income fell 30% y/y to $1.5mn,” said Alexander Paraschiy of Concorde Capital said in a note. The company has no borrowings as of end-June, while its cash balance stood at $14.4mn (vs. net cash of $14.9mn as of end-2019). It also reported that it secured a $5.0mn credit line from Alfa bank in July to finance its possible short-term needs. “As natural gas prices are likely to recover in Ukraine in 2H20, the company’s P&L is set to slightly improve, even though the absence
66 UKRAINE Country Report September 2020 www.intellinews.com
