Ukraine – overview

Facts about Ukraine

Capital: Kiev
Form of government: Republic
Administration: Run by President Petro Poroshenko, who is elected for a five-year term. Elections to the Ukrainian parliament, Verchovna Rada, are held every five years.
Area: 603,628 km²
Population: 46 million

Key drivers in Ukraine

  • Ukraine is one of Europe’s biggest energy consumers
  • The country has been producing oil and gas since the early 1900s and because of its geographic location, the country plays a central role in Europe’s energy supply
  • Ukraine has an unsustainable energy balance, where nearly two thirds of the country’s oil and gas consumption is imported while only 5 procent of the offshore resources have been exploited.
  • The annexation of the Crimea and the conflict in Eastern Ukraine have affected the country and its economy. The new president Poroshenko has initiated a modernisation of the country and deregulation of the legal system and the  business environment
  • Zhoda Investments’ production at the Lelyaki field is stable and unaffected by the geopolitical development in Ukraine

The development in Ukraine

Following a referendum on 16 March 2014, Crimea has declared independence from Ukraine and requested to be part of the Russian Federation, which has been granted by the Russian President and the Russian Parliament. The new Crimean Prime-minister has declared that the CNG interests on Crimea will be nationalized by the Crimean Republic. It has been reported that private interests and agreements will be respected. Neither the referendum nor the nationalization of CNG, which is in violation of the Ukrainian constitution, has been recognized by the government in Kiev or the Western community.

Due to the events described above, the board of directors of Zhoda Investments perceives an increased risk regarding potential future financial benefit from the Joint Investment Agreement (JIA) with CNG. This JIA accounted for 0 per cent of Zhoda Investments’ revenue and profit for 2013 and approximately 0,1 per cent of total assets in the balance sheet as of 31 December 2014.

The producing field Lelyaki is situated in Central Ukraine and the production is unaffected by the development in Eastern Ukraine and the Crimea.