The open joint-stock company Ukrnafta has always been an enterprise whose shares are in the greatest demand on the Ukrainian stock market. Of course, this is primarily proof of the company’s stable, effective, profit-making management. On Dec. 22, 2006, it fulfilled the year’s oil and gas condensate extraction quota (3.1 million tons). In fact, by the end of the year the company had extracted nearly 90,000 tons of this oil above the target. The plan was formally completed on Dec. 17: by the end of the year 3.2 billion tons were delivered and another 132 million tons above the target. In the third 10-day period of November the company completed the plan ahead of schedule to supply basic products and process its own and imported raw materials (170,700 tons in addition to 25,000 tons above the target by the end of the year), along with light fraction supplies (239,000 tons and approximately 26,000 above the target).
Compared to 2005, last year’s oil/condensate extraction rate increased by 69,200 tons (2.2 percent), and that of gas by 59.9 million m? (1.8 percent). A total of 43 bores (31 oil and 12 gas) became operational, and the drilling volume reached 151,100 meters. The output of bottled gas increased by 25,100 tons (14.7 percent), totaling 195,600 tons (compared to 170,500 tons in 2005). Light fraction output increased by 26,500 tons (11.1 percent), reaching a total of 265,200 tons (versus 238,500 tons in 2005).
It should be noted that the company saved 21 million cubic meters’ worth of production-technological gas loss by adopting modern preventive measures. Economizing on oil/condensate output by rationally managing production and technology needs amounted to 20,600 tons last year.
These indices could never have been reached without the constant updating of technological capacities. Last year the company launched a technological site for the collection and preliminary processing of oil at the Kybyntsi oil field of the Poltavanaftohaz oil and gas extraction directorate (Myrhorod raion, Poltava oblast). The new equipment allows the addition of two bores to the existing extraction/collection, transportation, and preliminary treatment facilities that boast oil production of nearly 30 tons every 24 hours). Automated regulation and control of the equipment installed here allow personnel to manage and control technological processes more efficiently, ensure reliable hydrocarbon counts, and significantly improve working conditions.
In Lokhvytsia raion, Poltava oblast, a separator gauge installation was revamped and a high-pressure 6.5 km gas pipeline made operational, which coupled this installation with the preliminary gas treatment one.
At the Chyzhiv and Hkynsk-Rozbyshiv fields the high and low pressure gas transportation currents have been split. This has ensured extra output of some 100,000 m? of gas every 24 hours by securing stable oil/gas-lifting supplies. These extra production capacities will make it possible to add another six bores scheduled for operation in 2007-08, which will yield over 600,000 m? every 24 hours.
Such production gains have allowed Ukrnafta to earn additional revenue. The stockholders have agreed to channel this money into boosting the company payroll. As of Jan. 1, 2006, Ukrnafta managerial and auxiliary personnel received a 10% pay raise. As a result, the company’s payroll fund increased by 43.1 billion hryvnias (compared to 2006) and the staff’s average monthly wages exceed 1,800 hryvnias.
Another pay raise took place in September, when the tariff rates (official salaries) of the main production and managerial staff went up by an average of 15 percent, depending on professional level, qualifications, and performance of every employee. The average monthly pay of the company’s staff approached 2,000 hryvnias, while the payroll fund received another 161.4 million hryvnias, or a 28.4 percent increase compared to 2006.
Naturally, the company’s financial capacities were positively influenced by the rise in world prices for oil and gas, which was also taking place in Ukraine’s market. But the company also did its best to provide opportunities for its social development.
In order to implement the concept of vertical integration, Ukrnafta considerably expanded and upgraded its filling station network (AZS). Currently its 560 stations are found in practically every region of Ukraine. Most of them are in Dnipropetrovsk (68), Zaporizhia, and Lviv oblast (63 each), 33 in Cherkasy, 30 in Rivne, 28 in Zakarpattia, 29 in Odesa, 23 in Kherson, and 22 each in Poltava and Kharkiv oblasts.
To secure maximum transparency and profit-making, the company has fully switched to the purchase of material and technological resources for its production needs exclusively through open tenders.
The development of hydrocarbon deposits represents Ukrnafta’s substantial reserve. Unfortunately, the company has not always found a common language with the state bodies on which it depends for licenses. The company has said it is ready to acquire a license for exploring and developing the Sakhalinka oil and gas field (Kharkiv oblast) and voiced its concern over the situation there, and the state of its development. This field urgently needs the introduction of modern technologies and processes. Ukrnafta has repeatedly approached relevant bodies of the Ukrainian government, to no avail.
Geological studies of the Sakhalinka field have been going on since 1980, i.e., for more than 20 years, although according to the Code of Ukraine “On Natural Resources,” the term cannot exceed five years. Today the development of the field is controlled by the state enterprise Poltavanaftohazheolohiia. In addition to Ukrnafta, five investors have joined the project. The field has been divided into several spheres of activity, or investor influence. As a result, Ukrnafta is carrying out the lion’s share of the capital- and labor-intensive work to develop these oil deposits, whereas other so-called investors extract gas and gas condensate from wells drilled with state funds and from only one bore drilled at their own cost.
After drilling 15 bores at its own expense, Ukrnafta introduced cardinal changes to the accuracy of the field’s geological structure and opened two new productive deposits. However, the activity of the company is constantly being restricted. It is even denied access to project documentation. To date, Ukrnafta is operating 21 bores, after spending some 350 million hryvnias on drilling and outfitting them. In addition, the company has spent approximately 20 million hryvnias on the construction of the Sakhalinka-Sydorychi gas pipeline, as well as nearly 10 million hryvnias on social development in Krasnokutske raion, Kharkiv oblast.
In other words, Ukrnafta’s investments in the exploration and development of the Sakhalinka field are approaching 380 million hryvnias. But a decision on this matter is being delayed. In the event that the company acquires a development license at an auction, it will pay Ukraine’s state budget for all previous geological exploration work and will receive every opportunity to secure the effective use of this field for the benefit of the Ukrainian state. Every year the company continues to have the possibility to make its own considerable investments (up to 200 million hryvnias) to develop the field, attract investors, including foreign ones, with the goal of introducing into the technological process cutting-edge technology to increase the volume of extracted hydrocarbons.
Ukrnafta is independently building up its research and technology potential. This year the company held its second young specialists’ conference. Ukrnafta’s individual structures employ 229 young specialists, 196 of whom have a full university education, while 33 have a base higher education. The company allows all of them to become actively involved in implementing measures to raise production efficiency. Young specialists are proposed as candidates for leading company positions. During the conference it was decided to improve internship and job placement for young specialists. The best projects submitted by the oil company’s young oil specialists are awarded honorable diplomas, certificates, and premiums. The general stockholders’ meeting, held on Nov. 17, 2006, marked an important event in Ukrnafta’s history. The shareholders, including state representatives, who voted with their 50%+1 shares of the company, boosted its representation in the company’s key bodies, but confirmed the authority of acting head of the board, Ihor Palytsia, thus acknowledging the totally satisfactory state of affairs in the company. The meeting also approved the founding of an Ukrnafta affiliate in the Federal Republic of Nigeria, with a 100% authorized fund formed by Ukrnafta. This, in turn, is supposed to enhance Ukraine’s energy independence.
