Ukraine adopts resolutions potentially affecting gas sales process
Recently Ukraine passed two resolutions that if implemented will have direct effect on sales process of natural gas in the country. Both resolutions are presented as temporary measures to be effective for the heating season of 2014-2015.
The first resolution, No. 596 “On the procedure of procurement of natural gas by industrial, energy-generating and heat-generating enterprises”, was passed by the Cabinet of Ministers of Ukraine on 7 November 2014. The resolution bans as of December 1, 2014 through February 28, 2015 some 90 major industrial, energy-generating and heat-generating enterprises to carry out the purchase of natural gas from any suppliers other than NJSC “Naftogaz of Ukraine".
The resolution is being seen as controversial and conflicting with a range of existing laws and applicable regulations. It is criticized by the European Energy Community (http://www.energy-community.org/portal/page/portal/ENC_HOME/NEWS/News_Details?p_new_id=9921) and is being challenged in Ukrainian courts by the local gas producers. Misen Energy AB (publ) (“Misen”) is assessing the situation and projects a rather limited impact to the company due a historically different construct of sales channels employed by Joint Activity (“JA”). As a result of earlier encountered challenges with the gas balance, JA’s current trade partners constitute companies outside the ones specified in the resolution No. 596.
The second resolution passed by the National Security and Defense Council of Ukraine and signed by the President of Ukraine by Order No.876/2014 on 14 November 2014 orders the Cabinet of Ministers of Ukraine to secure that all domestic production of natural gas is being directed to meet the needs of the population, housing and communal services during the heating season 2014-2015. Currently, the price of gas sold to the population is significantly lower than the commercial market price. The resolution is addressed to the executive branch of the Cabinet of Ministers, which on its part shall present order for resolution implementation. Misen is monitoring the situation and will inform the market on further developments.
For further information, please contact:
Göran Wolff, MD
Misen Energy AB (publ) (formerly Svenska Capital Oil AB (publ)) is a Swedish upstream oil and gas company with operations in Ukraine. The company was founded in 2004 and its shares are since 12 June 2007 traded on Nasdaq First North.
In 2011, Misen Energy AB (publ) acquired Misen Enterprises AB and its Ukrainian subsidiary, LLC Karpatygaz, including the rights to 50.01% of the revenue and profit from a gas production project in Ukraine. Under IFRS rules, this transaction is classified as a reverse takeover. In consideration of the acquisition, a new share issue was carried out.
The gas producing assets have been acquired by production cooperation via a joint activity project governed by a Joint Activity Agreement between the wholly-owned direct and indirect subsidiaries of Misen Energy AB (publ), i.e. Misen Enterprises AB and LLC Karpatygaz (together 50.01%) and PJSC Ukrgasvydobuvannya (49.99%), the largest producer of natural gas in Ukraine and subsidiary of the National Joint Stock Company Naftogaz of Ukraine. The value of the assets is estimated to be substantially higher than the purchase price for Misen Enterprises AB.
The purpose of the project is to significantly increase production of gas and oil by providing modern technologies via a large-scale investment program. The registered office of Misen Energy AB (publ) is in Stockholm and the shares are traded on First North under identification ticker MISE.
The Certified Adviser of the company at Nasdaq First North is Consensus Asset Management AB (formerly Thenberg & Kinde Fondkommission AB).
For further information, please visit our website www.misenenergy.se.