A quarter of oil is unsold in 2019 – Ukrnafta

On December 19, the Ukrainian Energy Exchange hosted an auction No.253 for the sale of oil and condensate of Ukrnafta. The company noted that they could not sell 363 thousand tons of products worth UAH 4.7 billion (including VAT), which is equal to the volume of production of the company for 3 months. In total, the company put up for sale almost 500 thousand tons (89 lots from 58 to 9000 tons). This was reported by the press service.

“Since the beginning of 2019, 11 out of 20 auctions have not taken place due to a lack of buyers. Ukrainian oil refineries are not interested in acquiring oil at prices set by the state auction committee, since they exceed the cost of imported oil of similar quality”, the statement said.

According to experts of the BRDO, the difference between starting prices at auctions and imported oil is UAH 600-700/t (including VAT) in favor of imported raw materials, which makes Ukrainian oil uncompetitive. According to the company, Naftogaz (which the state obliged to buy oil that was not sold at auctions) is also not interested in acquiring products through a non-market price level.

“Against the backdrop of government restrictions on the sale of raw materials and the unresolved tax debt problem, the company points to the risk of a reduction in hydrocarbon production in 2020 in the absence of urgent decisions by the Government”,  the company said.

Earlier Ukrnafta announced the suspension of LPG production.

Tags: The Cabinet of Ministers, Naftogaz, contracts, oil, legislation, EU, energy market, Ukrnafta, добыча нефти, drilling, oil transit, law, income, price, oil products, oil deliveries, parliament, auctions

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