Kiev Approved the Transfer of Gas Fields in Eastern Ukraine in Favor of Poroshenko’s Associate

Translated by Ollie Richardson & Angelina Siard


The fuel and energy industry committee of the government of Ukraine during a meeting on August 9th approved the transferral of 90% of the rights and obligations of “LLC Nadra Yuzovskaya” in the production sharing agreement concerning the Yuzovsky gas field (Kharkov and Donetsk regions) in favor of the “Yuzgaz B.V.” company (Netherlands), reported the deputy of the Verkhovna Rada Viktoriya Voytsitskaya.

“The government once again, after last year’s failure with the forged decision of the interdepartmental commission for the Yuzovsky field, tries to defiantly steal the largest gas area from the Ukrainian people … On August 9th at a meeting of the government committee the decree of the Cabinet of Ministers on replacing the ‘Shell’ company in the production sharing agreement with the unknown to all ‘Yuzgas’ company was approved,” she wrote on Facebook.

According to the information of Voytsitskaya, the government committee also proposes to send the money that is subject to payment by Yuzgas to “Nadra Ukrainy”, and not to the state budget.

As was reported, in July, 2016 the Dutch “Yuzgas” became the winner of an investor involvement competition for the implementation of a production sharing agreement on the extraction of hydrocarbons in the Yuzovsky area, however the Cabinet of Ministers on November 2nd of the same year refused to participate in the production sharing agreement via a legal decision.

“Yuzgaz” appealed against the decision of the Cabinet of Ministers in court. As a reminder, “Yuzgaz” is linked with Igor Kononenko, a close associate of Petro Poroshenko.

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The founder of “Yuzgaz” is the “Emerstone Energy” investment fund, which is a part of “Emerstone Capital Partners” belonging to the businessman Jaroslav Kinach.

The Yuzovsky site of 7886 is located in the Dneprovsky-Donetsk oil and gas bearing basin on the territory of the Donetsk and Kharkov regions. According to the estimates of “Nadra Ukrainy”, the capacity of the Yuzovsky area exceeds 3 trillion cu/m of conditional fuel, and the basic scenario of its development assumes the base annual production of 10 billion cubic meters of gas, and optimistically – 20 billion cubic meters.

“LLC Nadra Yuzovskaya” 100% belongs to the state national joint stock company “Nadra Ukrainy”.

“Shell” and “LLC Nadra Yuzovskaya” signed a production sharing agreement on searching for, exploring, and producing hydrocarbons in the Yuzovsky area on January 24th, 2013. In September, 2013 “Shell” paid a signing bonus of $25 million. At the end of 2014 the head of “Shell” in Ukraine Graham Tiley said that it wasn’t succeeded to make the desired progress in the exploration of the Yuzovsky gas field because of the combat operations in Donbass, and in September, 2015 “Shell” finally left the production sharing agreement.

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