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Message to shareholders
Ladies and gentlemen!
In 2002 the performance of Ukrnafta JSC was successful. Today we hold leading positions in national oil and gas industry and provide 93% of total oil production, 40% of gas condensate and 18% of total natural gas production in the country.
Performance results of Ukrnafta JSC are another step forward towards the goal we aim at: conversion of the Company into a vertically integrated oil company which shall meet international standards.
In 2002 we managed to outstrip all forecast production figures and proved once more the good reputation and competence of the Company.
Strict cash earnings control on oil, gas condensate and petrochemicals auctioned off enabled us to provide timely payments to the State Budget, extinguish tax arrears of the previous periods, improve production processes and social security at the enterprises owned by Ukrnafta JSC. According to Fiscal Administration figures, by January 1, 2003 the total overpayment made up 11.6 mln USD.
We believe that auctions will promote visibility of pricing, stimulation of competitiveness and raising of payment discipline on the power market. Visibility of sales is conducive to investment attraction, as a result of which financial basis for expanding of production is created.
We are convinced that the main and the most reasonable way of replenishment of resources is augmenting of prospective drilling. Stabilization and growth of oil and gas production in Ukraine are possible only on condition that oil and gas resources are sustained or expanded.
We hope that next year the Company will be able to keep increasing the volumes of drilling, though we failed to do it in 2002 due to deficit of funds for drilling wells as a result of low prices for oil and underpayments for gas.
It goes without saying that mechanical increase in prospective drilling will not bring the expected results unless thorough selection and preparation of perspective wells as well as forecast of their oil and gas potential are made. Only such approach to selection of new wells can compensate volume of hydrocarbons produced.
In recent three years financing of geophysical prospecting has been executed mainly at the expense of own means in the amount of 35.1 mln USD.
During the year the subsidiaries of Ukrnafta JSC invested 155,959 thousand USD; capital investments at the expense of internal funds were directed to building of wells, oil and gas pipe-lines, interindustrial headers, roads, other production facilities needed by the Company for its production activity.
Another way of increasing the share of the Company on the oil market is diversification of resources at the expense of oil production in other countries. Ukrnafta JSC is holding negotiations on cooperation with foreign oil companies in order to enter the international oil market.
During the year the Company paid much attention to participation in international exhibitions, conferences and seminars where it presented the line of its foreign economic policy and offered cooperation to the wide circle of oil and gas companies and financial institutions of Canada, the USA, European Union members, countries of the Middle East and post-soviet states.
We believe that the chosen priorities, support of our shareholders and selfless labour of the numerous staff will favour the further development and flourishing of the Company.
Let me offer for your consideration the annual report of 2002 and invite all of you to fruitful and mutually profitable cooperation.
Best regards,
I. Palytsia.
Honorary president
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