Kyiv, March 28, 2024.

The Asset Recovery and Management Agency (ARMA) calls on the National Security and Defence Council and the Verkhovna Rada to resolve the issue of production at the Sakhalin field at the legislative level, as the state will lose UAH billions a year.

The reason for the application is the existing agreement between the National Agency and PJSC Ukrnafta dated 13 June 2023 on the management of corporate rights of PJSC MC Ukrnaftoburinnya.

The agreement was concluded in accordance with the Government's Order No. 454-r dated May 23, 2023.

PJSC MC Ukrnaftoburinnya held a special licence for subsoil use and hydrocarbon production at the PJSC Sakhalin.

Unfortunately, by the decision of the Sixth Administrative Court of Appeal, the special licence was cancelled, which threatened the national interests and energy security of the state. At the same time, the Supreme Court, by its ruling of 12 December 2023, dismissed ARMA's cassation appeal and also dismissed the cassation appeal of PJSC MC Ukrnaftoburinnya.

According to the management agreement, the state budget of Ukraine, represented by ARMA, should receive 90% of the company's net profit.

Due to the cancellation of the special licence and, accordingly, the suspension of production from December 2023, the state will lose almost 500 million cubic metres of natural gas and about UAH 10 billion in taxes and dividends annually.

In addition, a halt in production at the Sakhalin field could result in the citizens of Kharkiv Oblast being left without gas supply in a full-scale war.

ARMA calls on the National Security and Defence Council and MPs to consider a legislative solution to the production issue. Namely, to allow the issuance of a special licence for work at the Sakhalin field without an auction on the basis of a management agreement concluded with the National Agency. This decisive and logical step will safeguard the interests of the state and ensure that the state budget receives about UAH 10 billion annually. These funds are more important than ever for maintaining Ukraine's defence capability.

The National Agency believes that the cancellation of a special licence, deprivation of the citizens' ability to use natural gas and the possibility of selling such a licence during the war are crimes against the state.

ARMA emphasises that all government agencies must join forces to ensure budget revenues and the uninterrupted work of these fields.