On February 20, the Ukrnafta auction №255D failed at the Ukrainian Energy Exchange. No bids were received from the buyers for the sale of oil and gas condensate. As a result, Ukrnafta could not sell oil and condensate worth UAH 5.62 bln. The next auction is scheduled for March 11.
Total volume of unsold products, including auctions that have failed before amounted to about 480,000 tons, including production in February and March. This equals 4 months production. The company has put up for sale 81 items ranging from 600 to 11,483 tons in volume.
Despite the company's numerous requests to the Government to pay attention to it, oil and condensate sales issue remains unsolved due to the restrictions imposed by the state.
Since the beginning of 2020, this is the second auction of Ukrnafta, which failed due to absence of buyers. Last year, 11 out of 20 exchange auctions at which Ukrnafta was legally obliged to sell oil and condensate at the starting prices set by the state auction committee have failed. Start-up pricing formulas link them to the import parity, so they may substantially exceed the prices at which Ukrainian oil refining companies can import or buy it on the domestic market.
The company has repeatedly pointed to the Government on this issue and has suggested the change of the current order of sale of liquid hydrocarbons, because due to non-market pricing it cannot ensure rhythmic sale of Ukrnafta’s oil and condensate. Restrictions on the sale of raw materials negatively affect Ukrnafta's financial performance and the Company’s ability to finance its investment program.