21:09 PM Sunday, September 23, 2018 Friday, March 2
Russia cuts gas to Ukraine; Kyiv sends Brussels ‘early warning’ of a gas crisis; Poroshenko tells Naftogaz to seize Gazprom overseas assets for $2.6 billion bill; Ovostar plans to produce 2 billion eggs
image/svg+xml Kyiv Lutsk Rivne Zhytomyr Lviv Ternopil Khmelnytskyi Uzhgorod Chernivtsi Vinnytsia Chernigiv Sumy Kharkiv Poltava Cherkasy Kirovohrad Lugansk Dnipropetrovsk Donetsk Zaporizhzhia Mykolaiv Odesa Kherson Simferopol Sevastopol Ivano- Frankivsk

Ukrainians face a chilly weekend as Naftogaz plans to cut gas deliveries by 5-10% on Saturday after Russia’s Gazprom refused on Thursday to send gas that Naftogaz had paid for. Due to unseasonably cold temperatures and a 20% cut in Russian gas entering Ukraine, “approximately 10 million cubic meters of gas per day will be the expected deficit, which we cannot now cover," Naftogaz CEO Andriy Kobolyev told the National Security and Defense Council Thursday evening. Kobolyev said Naftogaz would not take transit gas, as that would allow Gazprom "to tell Europeans from their PR perspective: 'Look, they are taking Russian gas again'."

Gazprom is angry that a Stockholm Arbitration Court ordered it Wednesday to pay Naftogaz $2.6 billion. But, by not supplying pre-paid gas to Naftogaz, Russia is violating a separate, December decision by the same court, Kobolyev says. In that decision, Naftogaz was ordered to buy 4 billion cubic meters of gas at market prices. The Naftogaz CEO said on Ukrainian TV Thursday night: “This automatically means that they will not be able to require us this year to take or pay. The cost of this mistake for Gazprom is potentially hundreds of millions of dollars,”

Ukraine has sent to the European Union a note of ‘early warning’ of a gas crisis. Under a mechanism established after the January, 2009 gas crisis, there should be a Ukraine-EU-Russia meeting to guarantee gas flows. "The history of 2009 will not be repeated,” Olena Zerkal, deputy foreign minister for European Integration, wrote on Facebook. "Stockholm, the [EU] Association Agreement, and the reform of the gas market have finally changed the paradigm of relations with the Russian Federation in the gas sector. Blackmail does not work anymore."

Gazprom will be fined $500,000 every day until it pays the $2.56 billion it owes Ukraine, Naftogaz Chief Commercial Officer Yuriy Vitrenko told reporters Thursday. He added: “This will affect Gazprom's reputation. So, we expect that they will pay us $2.56 billion with interest soon." Concorde Capital’s Alexander Paraschiy writes: “This is a big victory for Naftogaz and very positive news for Ukraine as a whole. We do not believe Gazprom’s appeals will be successful.”

President Poroshenko said that if Gazprom does not start paying the $2.6 billion Naftogaz should start seizing Gazprom assets outside of Russia. Specifically, he suggested assets in Germany connected with construction of North Stream-2, the Russian pipeline devised to end Ukraine’s transit role for Russian gas to Europe.

The Rada approved Thursday a bill simplifying land acquisition and use for oil and gas exploration and production. The bill was first introduced in 2015. Oleg Prokhorenko, head of state gas production company Ukrgazvydobuvannya argued bill was important for developing gas production, Interfax reports. Difficulties in obtaining land plots restrains gas production by about 1 billion cubic meters per year, or 5 percent of last year’s production.

Due to heavy snow, schools and many offices in Kyiv will be closed on Friday and Saturday. Several regional airports have been closed and some flights from Kharkiv were delayed or cancelled. Highways have been opened and closed in Odesa, a Black Sea region with few snowplows.

In a surprise move, the central bank lifted its key interest rate by one full percentage point to 17 percent, the highest since mid-2016. No economists in a Bloomberg survey predicted the hike. The National Bank of Ukraine cited inflation concerns, but indicated that it may now pause as interest rates are high enough to hold down prices. The bank said in a statement: “The NBU believes that after several policy rate increases, which began in October 2017, the current monetary conditions are sufficiently tight to bring inflation back to its mid-term target.” Timothy Ash writes: “Very sober, and logical move by the NBU given inflation pressures. Smoliy's credibility in the market's eye continues to rise. Not sure Smoliy has improved his chances of being affirmed as governor in a permanent capacity by this move.”

Consumer inflation hit 14.1% in January, Yakiv Smoliy, acting governor of the National Bank of Ukraine, told a briefing Thursday. He added: “According to preliminary estimates, soaring inflation was observed in February." The culprits were: unexpected surge in food and services prices, increase in fuel prices and weakening of the hryvnia.

Holland Van Gijzen Advocaten en Notarissen will provide law services to Naftogaz related to the unbundling of the company and creation of a gas transport system operator. According to a report in the ProZorro e-procurement system, the contract is for $630,000, barely one quarter the expected price.

Ovostar Union, the egg producer, increased revenue by 27% last year, to $99 million, according to a company report posted on the Warsaw Stock Exchange website. EBITDA grew by 8.3%, to $26 million. This year, Ovostar plans to boost egg production by 5% to 1.75 billion eggs, and the number of laying hens by 9%, to 7.2 million. Ovostar continues its $15 million investment program at Stavyschanska poultry farm. By 2020, the bird population is to be 10 million heads and egg production 2 billion eggs a year.

Astarta, the nation’s largest sugar producer, plans to build and put into operation a 60,000-ton storage facility at Narkevychy sugar factory in Khmelnytskiy region by 2020, the company reports.

Alexander Yaroslavsky’s DCH group bought on Thursday EVRAZ DMZ, a Dnipro located integrated steel mill specializing in the manufacture and sale of pig iron and rolled steel. Last year, EVRAZ DMZ produced 1 million tons of pig iron, 918,000 tons of crude steel and 785,000 tons of rolled steel products. DCH is paying $106 million for a company that has EBITDA last year of $16 million.

Irish company Altostrata plans to invest EUR255 million to build a 250 MW solar power plant in Dnipropetrovsk region, Interfax reports. To be built over 500 hectares in Levadky, 90 km east of Dnipro city, the plant is to produce enough electricity for 40,000 homes and businesses, Valentin Reznichenko, head of Dnipropetrovsk State Administration, said Thursday at the signing ceremony. Torsten Merkel, CEO of the Dublin-based company, said the two-year construction project will create 450 jobs.

New foreign direct investment in Ukraine was $1.9 billion last year, the State Statistics Service said. About one quarter, or $506 million, was from Cyprus, presumably offshore Ukrainian or Russian money. The next four sources were: Russia -- $396 million; the Netherlands -- $262 million; Britain -- $212 million; and Germany -- $119 million.

Sales of new cars in Ukraine in February grew by 22% compared to the same month in 2017. This year, experts predict a 20-25% increase in the car market over 2017, according to AUTO-Consulting. Of the 5,800 cars sold in February, the brand leaders were Volkswagen, Toyota, Renault, Audi, Nissan and Skoda.

UBJ a.m. is reported by UBJ Editor in Chief. He is reachable at

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