Oil and gas

Ukrnafta [UNAF UK] increased starting price for its oil to UAH 5680 per tonne (USD 98 per bbl) at May 26 oil auction. In the earlier auctions, UNAF sold its oil at UAH 3000-3500 per tonne (USD 52-60 per bbl) price. The company has also changed terms of shipment. Whereas earlier UNAF sold its oil ExWork, this time the sold oil is to be shipped to pipelines and railway stations.

At the EGM that was held on Tuesday, January 26, the shareholders of Ukrnafta [UNAF UZ] decided to pay out 100% of the net revenue earned by the Company in FY2006-2008. The total sum of the dividends should amount to UAH 5 bln.

The gas price for Ukraine in the first quarter of 2010 may reach USD 300-310 per 1000 cbm, according to a statement made yesterday by Gazprom Vice Chairman Vladimir Scherbakov. He also noted that the tariff for gas transport by Ukrainian pipelines for Gazprom will increase from its current USD 1.7 per thsd cbm/km to USD 2.8-3.0 per thsd cbm/100 km. Earlier, Gazprom remarked that Ukraine will have an average gas price of USD 280 per thsd cbm in 2010.

The shareholder meeting of Ukrnafta [UNAF UZ] on November 27, failed due to the fact that the registrar, Ukrnaftogaz, which is affiliated with Privat Group, didn't provide the shareholder registry. More hopes were placed on this particiculare EGM, compared to previous attempts to hold meetings, due to the existence of negotiations between the state and the Privat Group on the issues of the further management of the Company and the state’s willingness to formalize cooperation by signing a memorandum of understanding between UNAF's shareholders.

During the Deutsche Investment Forum last week, the top management of Galnaftogaz [GLNG UZ] spoke about the Company’s plans to make a listing on a western stock exchange. The Company wanted to make the listing in 2008 but it changed its plans due to turmoil of the financial crisis. In their latest statements, GLNG’s management noted that they expect markets to recover and see the possibility of making an IPO in 2010-2011. The Company’s representatives also noted that, unlike the case in 2008, when the Company posted a UAH 300 mln net loss, in 2009, Galnaftogaz is generating earnings and is capable of servicing its debts.

The Fitch international rating agency has upgraded its long-term ratings, in national and foreign currency, for the National Joint-Stock Company Naftogaz from RD (Restricted Default) to CCC. The agency also awarded a ‘B’ rating to the new Naftogaz Eurobonds, which were issued in the volume of USD 1.6 bln.

The Ukrainian state monopoly Naftogaz has completed the comprehensive restructuring of its external debt by exchanging USD 500 mln in Eurobonds and other liabilities (UAH 1.1 bln) for a new Eurobonds issue. The new bonds have already been submitted to the clearing system and will soon appear in circulation in the Ukrainian Eurobond segment.

Naftogaz has serviced the interest on its $500m Eurobonds while the group of aggressive bondholders (represented by Corlbrow) finally agreed to vote for the restructuring at a bondholders meeting.

Moody's Investors Service downgraded the probability of default rating of the Naftogaz to “Ca” from “Caa2”. At the same time, Naftogaz Ukraine's foreign currency corporate rating remains unchanged at “Caa2”. The ratings remain on the Rating Watch List, with their outlook changed from “negative” to “undefined”.

Government-owned monopoly Naftogaz announced terms of restructurization. Bondholders were offered to exchange securities at new Eurobonds with 9,5% coupon, maturity at September 2014 supported by government guarantees.