On February 26th, Ukrnafta’s new management team delivered a long-term strategy to the company’s Supervisory Board for their consideration. The new strategy addresses the whole industry value chain across exploration & production (E&P), refining and retail sectors.
This strategy creates value in three stages. First by restructuring and improving the existing businesses in E&P, and retail. Secondly, through integration along the value chain from wellhead to petrol pump and optimization of the resulting business – and then thirdly accessing international capital for further investment.
It envisages delivering double the current annual production of crude oil, and increasing the production of natural gas by 50% up to 2025 – and a consequent increase in the value of Ukrnafta by more than 5 times the current base.
Should the strategy be implemented successfully, Ukrnafta will become a national oil champion.
Not only will this benefit all shareholders and generate substantially higher levels of tax payments into the national budget, but it will go along way to meet Ukraine’s national energy priorities as set out in the National Energy Strategy.
CEO Mark Rollins added:
“This is not a strategy for any individual shareholder - this is a strategy in the strong economic interests of all shareholders - and in the strong interests of the State and people of Ukraine. Despite the decrease in world oil prices, our first step will be to aggressively transform and invest in our current base businesses. This will require a program of radical restructuring and introduction of new technologies and techniques for oil extraction. However this has the potential to offer excellent opportunities for our employees, our partners in the supply chain, and the communities in which we work. I hope that we can solve the legacy problems which currently hold the company back in the next few months so that we can bring the benefits of the new strategy as soon as possible.”.
It should be noted that the strategy will need further discussion with the Supervisory Board and input from government before it can be implemented.
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