PJSC Ukrnafta reports about stoppage of production at Zavodivske field in Lviv oblast. The company was forced to stop production following the refusal by the State Service for Geology and Natural Resources to extend the license for this field. As reported earlier, Ukrnafta submitted a complete package of documents on time to extend 9 licenses due to expire this year.
The license for Zavodivske field expired on March 31. The company operated 10 wells with annual output of 5.4 ktonnes of oil and 1.9 mln m3 of oil gas. Following the stoppage the company estimates that it will miss UAH 67 mln in revenues, while the government will miss about UAH 20 mln in rent revenues. The stoppage will lead to conservation costs of UAH 10 mln, and will threaten the jobs of Ukrnafta employees who service the wells.
Mavriky Kalugin, Executive Vice President for Upstream, Ukrnafta:
“We are disappointed by the decision of Gosgeonedra to refuse the extension of our license. The stoppage will not only lead to direct financial losses. What’s worse is that we may not achieve pre-shut-in production rates due to kill fluids during suspension operations damaging the near-well bore.”
Nine of Ukrnafta’s licenses expire this year. Collectively they account for about 20% of the company’s oil production. These include Anastasievske, Rybalske, Artukhivske, Pivdenno-Panasivske, Lypovodolynske and Korzhivske fields in Sumy oblast; Koziivske and Kachalivske fields in Kharkiv oblast; and Zavodivske field in Lviv oblast. The company previously reported that it had taken all steps to have these licenses extended and provided the documents to the regulator in full and on time. However, Gosgeonadra has refused to extend the licenses on the pretext of Ukrnafta’s tax debt. Meanwhile the regulator ignores the court ruling that tax dent does not give the legal ground for refusing extension of a license. Ukrnafta deems that the regulator’s actions violate the law, hence the company has filed a lawsuit to protect its interests.
Note to editors: in 2016, Ukrnafta’s units operating in Lviv oblast generated over UAH 480 mln in tax revenues.
For more information please contact press office: +38 044 239 14 93
