Ukrnafta’s production in November remains stable
Ukrnafta’s production in November remains stable

Based on the current data, in November 2019 PJSC Ukrnafta produced 125.2 ktonnes of oil and condensate and 95.5 mln m3 of gas, 2.9% and 2.6% up respectively against November 2019. Daily production rates for hydrocarbons and condensate made 4.17 ktonnes and 3.18 mln m3 for gas, having slightly increased comparing to the previous month. 

Against the background of production growth, Ukrnafta faced the impossibility of selling the entire volume of oil through the system of state auctions. The main problem is the non-market level of starting prices set by the state auction committee. According to the experts of the Better Regulation Delivery Office, the starting prices at auctions are 600-700 UAH/t (including VAT) higher than the prices of imported oil, which makes the products of Ukrnafta uncompetitive. 

Since the beginning of this year, due to the absence of buyers, 11 of the 19 auctions have failed.  The state represented by Naftogaz of Ukraine is legally obliged to buy unsold oil and condensate after two consecutive auctions have not been held. However, this obligation is not fulfilled due to the lack of appropriate funds in the financial plan of Naftogaz and the economic unattractiveness of such operations. 

Artificial restrictions on the sale of products have a negative impact on the financial condition of the company and its ability to invest in the business development, as a result of which Ukrnafta expects a reduction in production next year. 

Average daily production rates

November 2019

October 2019

Monthly change, %

November 2018

Y-o-y change, %

Production of crude oil and condensate, ktonnes

4.17

4.15

0.5

4.06

 2.7

Gas production, mln m3

3.18

3.17

0.3

3.1

2.58