Page 14 - FSUOGM Week 35 2020
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FSUOGM                                            POLICY                                            FSUOGM


       Ukraine's Naftogaz vows not to give




       up in licence dispute




        UKRAINE          UKRAINIAN gas firm Naftogaz has vowed  company’s special permits is unlawful,” Naftogaz
                         to keep fighting a 2017 decision by authorities  said in a statement. “Naftogaz will continue to
       The licences were   to cancel three of its exploration licences, even  challenge this decision in the courts.”
       revoked in 2017 and   though rights to one of the blocks in question   Naftogaz said it had invested some UAH1bn
       one of the blocks in   have now been awarded to another company.  in developing the three blocks between in 2011
       question has now been   Ukraine’s state geological service (Gos-  and 2016, including UAH750mn at Budysh-
       awarded to another   geonadra) has awarded a 20-year exploration  chansko-Chutivska. Its work at the site com-
       company.          licence for the Budyshchansko-Chutivska block  prised 3D seismic collection and other surveys,
                         in the Poltava region to a firm called Nafto-  as well as the drilling of three exploration wells.
                         gazgeorozvidka, it announced on August 31.  Those wells found three fields.
                         Naftogazgeorozvidka is a subsidiary of DTEK,   According to Naftogaz, Gosgeonadra
                         Ukraine’s largest energy company, which is  revoked the licences based on a decision by the
                         owned by oligarch Rinat Akhmetov.    Poltava regional council that “contained no sub-
                           Gosgeonadra held a tender for a licence  stantiations and supporting documents” and
                         which attracted bids from five companies.  relied on the “unfounded and biased appeals” of
                         The licence sold for UAH650.5mn ($23.7mn),  its individual members.
                         which is nearly eight times the starting price   Contacted by NewsBase, Gosgeonadra noted
                         for bids.                            that the Kyiv Court of Appeal, the Supreme
                           Budyshchansko-Chutivska contains 2.73mn  Administrative Court of Ukraine and the
                         tonnes (20mn barrels) of oil and 856mn cubic  Supreme Court of Ukraine had all ruled against
                         metres of gas. It was previously operated by  Naftogaz in the dispute. Naftogaz’s upstream
                         Naftogaz, but the state company had its licence  unit Ukrgasvydobuvannya took part in the auc-
                         revoked by Gosgeonadra in 2017. The regulator  tion for the Budyshchansko-Chutivska block,
                         also suspended Naftogaz’s rights to two more  Gosgeonadra told NewsBase, but its bid of
                         blocks in Poltava, Obolonska and Pysarivska.  UAH650mn was beaten by Naftogazgeorozvid-
                           “The decision of Gosgeonadra to revoke the  ka’s offer. ™



       Rosneft seeks tax changes after losses





        RUSSIA           RUSSIA’S Rosneft has reportedly proposed  ($724) per tonne for 2020.
                         changes to a mechanism in taxation that penal-  Rosneft suggests replacing this fixed refer-
       Russian oil companies   ises companies for charging too much for motor  ence price with actual on-exchange prices in
       sustained billions in   fuels in Russia.               Russia, or reducing damper payments to the
       losses because Russian   Under the so-called damper mechanism,  government to zero when wholesale fuel prices
       fuel prices were higher   introduced last year, companies pay more in tax  in Russia are 10% below the reference price.
       than in Europe.   when domestic fuel prices are higher than export   “The Ministry of Finance has previously
                         prices. But when Russian prices are lower, they  stated that any amendments to the damper
                         receive a subsidy.                   mechanism would be unacceptable, as they
                           The collapse in European fuel demand as a  would lead to budget revenue losses,” VTB Cap-
                         result of coronavirus (COVID-19) led to compa-  ital (VTBC) said in a research note on August 28.
                         nies paying unprecedented amounts under the  “We think that if any such amendments were to
                         damper – RUB236bn ($3.2bn) in total during  be implemented, they might be compensated by
                         the first half of the year.          introducing an additional tax burden on the oil
                           Rosneft, the country’s biggest fuel retailer, has  industry through other channels.”
                         called for its formula to be adjusted to reduce its   Reducing damper payments would provide
                         losses incurred during the crisis. It has sent a let-  a boost to Russian refining, the bank said, but
                         ter to the government, and a meeting took place  producers would end up paying more mineral
                         to discuss the damper at the energy ministry on  extraction tax (MET), due to a damper-linked
                         August 25, sources have told Kommersant. No  component.
                         decisions were taken, however.         “If the changes to the damper mechanism
                           Under the current formula, the damper for  suggested by Rosneft were to materialise, we
                         gasoline is calculated as 68% of the difference  estimate this would have a combined gain effect
                         between the export price and a reference price  of $0.5bn on Russian oils, raising the sector
                         set by the government. That price is RUB53,600  EBITDA by around 1% in 2021,” VTBC said. ™



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