The Kyiv District Administrative Court has ordered the State Service of Geology and Mineral Resources of Ukraine to not suspend the issuing of special permits to the country`s largest oil company, Ukrnafta, in connection with the company`s arrears under payments of royalties for the use of subsoil resources.
This was stated in a court ruling dated August 31, 2016, following a lawsuit filed by Ukrnafta to challenge the mineral resources agency`s resolution No. 271 of August 23 on suspension of special permits to extract hydrocarbons in three fields in Poltava region.
The court also suspended the resolution.
”The court agrees with arguments presented by the plaintiff that the termination of extraction of minerals at Kharkivtsevske, Hlynsko-Rozbyshevske and Rudovsko-Chervonozavodske fields can cause a sharp decrease in income, the impossibility of paying taxes and other mandatory payments to the state budget, as well as hydrocarbon production losses,” as stated in the court decision.
In addition, the court has noted that the withdrawal of mining licenses poses a risk that extraction activity at those fields may be impossible to be restored.
As UNIAN reported earlier, in late August the mineral resources agency intensified its work, seeking to suspend special permits for Ukrnafta.
On August 23, the mineral resources agency issued its resolution on suspension of three special permits due to the company`s arrears under royalties payments. On August 30, the mineral resources agency notified Ukrnafta that it had suspended special permits from September 1 this year. In response, the company noted that if the parties failed to reach consensus on the issue, the company would exercise its right to defend its interests in court.
Further, Ukrnafta reported that the suspension of 14 special permits, which was also initiated by the mineral resources energy, would result in the decline of mining hydrocarbons by the company, based upon calculations of 285,000 tonnes of oil with gas condensate and 135 million cubic meters of gas per year, the dismissal of 1,800 employees and a shortfall of tax revenues to the state budget.
UNIAN memo. Ukrnafta is the largest state-owned oil and gas company in Ukraine. It accounts for about 70% of oil and condensate production, and 11% of gas extraction in the country. Ukrnafta is one of the key players in the retail market for petroleum products in Ukraine: the company owns more than 560 fuel filling stations throughout the country.
Ukrnafta`s shares are listed on the Ukrainian Exchange (UX) and the PFTS Stock Exchange (Kyiv). Depositary receipts for company`s shares are traded on the Frankfurt Stock Exchange. Last year, the company reported a net loss of UAH 5.44 billion, as compared with a profit of UAH 1.265 billion in 2014.