On May 20, the court hearing is due to take place on the appeal of JSC Ukrainian Energy Machines, and we must prevent the continuation of the gas production shutdown. Especially when the country is going through wartime and is forced to introduce emergency power cuts that affect not only industrial consumers but also ordinary Ukrainians.

On 23.05.2023, in accordance with the Resolution of the Cabinet of Ministers № 454-r, was approved the transfer of assets, namely the corporate rights of PrJSC MC Ukrnaftoburinnya, to the management of PJSC Ukrnafta. According to the management agreement, the National Agency ensures the reception of 90% from the profit based on the results of dividend distribution for the reporting period.

Thus, the state budget will soon receive revenues for the period from July to December 2023. It was in December 2023 that the permit was cancelled based on a court decision of the Sixth Administrative Court of Appeal.

This was followed by Order № 621 dated 04.12.2023 of the State Service of Geology and Subsoil of Ukraine, which resulted in the complete shutdown of gas and liquid hydrocarbon production at the Sakhalin oil and gas condensate field.

ARMA has repeatedly appealed to the State Service of Geology and Subsoil of Ukraine regarding the inadmissibility of the operational shutdown and implementation of the Action Plan for the preparation for the preservation of the Sakhalin oil and gas condensate field but has not received a proper response.

Also, in December 2023, ARMA filed a cassation appeal to the Supreme Court against the decision of the Sixth Administrative Court of Appeal and applied for a suspension of the appellate court's decision pending cassation proceedings. However, the Court issued a ruling refusing to open cassation proceedings.

The same month, ARMA also asked the Prosecutor General's Office to intervene in the Supreme Court appeal against the Sixth Administrative Court of Appeal's decision to revoke Ukrnaftoburinnya's gas production licence by entering into the case and filing a cassation appeal to protect the public interest.

More than a month and a half ago, the National Agency addressed the NSDC of Ukraine with a public statement proposing to make a decision on an appeal to the Verkhovna Rada of Ukraine on the need to legislate the operation of the Sakhalin oil and gas condensate field.

The National Agency also called for support of the draft law № 11137 ‘On Amendments to the Subsoil Code of Ukraine on Prevention of Crisis Situations Threatening the National Security of Ukraine’ registered in the Verkhovna Rada of Ukraine on 01.04.2024.

The Draft Law provides amendments to the Subsoil Code of Ukraine, which provides a special permit to be granted without an auction during the martial law by a decision of the NSDC on the basis of an asset management agreement concluded with ARMA.

The purpose of the legislative initiative was to restore gas and liquid hydrocarbon production, the suspension of which would lead to losses amounting billions of hryvnias.

It is worth to mention that the downtime of PrJSC MC Ukrnaftoburinnya leads to the loss of energy resources produced to ensure the energy security of Ukraine in such quantities every month:

• natural gas - 47.3 million cubic metres;
• condensate - 3326 tonnes;
• GCLH - 1903 tonnes.

The forecasted net profit of PrJSC MC Ukrnaftoburinnya for 2024, which is the source of the state's revenues from asset management, based on the average performance indicators for 11 months of 2023, is UAH 6.5 billion. The losses of the local and state budgets of Ukraine from the shortfall in revenues due to the cancellation of the special permit and activities under the contract amount to UAH 400 million per month.

Today, the authorities must demonstrate unity! National interests must be protected by: The National Security and Defence Council of Ukraine, the Parliament, The Committee on Environmental Policy and Nature Management, and law enforcement bodies.

We must prevent the continued suspension of gas production, as this issue is critical for Ukraine!

REFERENCE

The Sakhalin oil and gas condensate field belongs to the Talalaivsko-Rybalsky oil and gas area of the Eastern oil and gas region of Ukraine. It is the largest explored gas field in Ukraine with reserves of 15 billion m³.

The field has been in operation since 1984.

On November 28, 2023, a panel of judges of the Sixth Administrative Court of Appeal issued a ruling cancelling Ukrnaftoburinnya's licence to produce hydrocarbons at the Sakhalin field.

As a result, on December 1, 2023, PrJSC MC Ukrnaftoburinnya stopped production at the Sakhalin field.