11:16 10.07.2017

PGO accuses Ukrgazvydobuvannia's managers of setting too high cost of hydraulic fracturing conducted by Tacrom, Belorusneft

PGO accuses Ukrgazvydobuvannia's managers of setting too high cost of hydraulic fracturing conducted by Tacrom, Belorusneft

Ukrainian Prosecutor General's Office (PGO) has accused managers of public joint-stock company Ukrgazvydobuvannia of setting too high cost of hydraulic fracturing conducted by Romania's Tacrom and Belarus' Belorusneft, the press service of the PGO has reported.

"During the pretrial investigation it was established that Ukrgazvydobuvannia's managers acting in collusion with managers of foreign companies and abusing power embezzled state-owned funds in an especially large amount via setting too high cost of hydraulic fracturing works conducted in Poltava and Kharkiv region in 2016-2017," the PGO said.

The PGO raided the regional office of Ukrgazvydobuvannia and offices of the contractors on July 7.

Ukrgazvydobuvannia Head Oleh Prokhorenko recalled in response of accusations of setting too high cost of the works that six companies, including international companies Weatherford and Halliburton took part in the tender.

"They lost as Belorusneft and Tacrom gave the best prices. Fancy prices! $160,000 is for one operation, while private companies paid $500,000. And now the PGO is pressing - will they tell me about setting too high prices? I am ready to discuss in public with any representative of the PGO the pricing and the competitive dynamics in the hydraulic fracturing market of Ukraine," he wrote on his Facebook page.

He said that the law enforcement agencies seized the documents, without which gas production at the company's wells may be suspended.

"I will also demand that concrete persons from the PGO be held responsible for the disruption of the technological process," he added.

Prokhorenko recalled that in June, Ukrgazvydobuvannia increased gas production by 5.4% compared to the same month in 2016, and in July it was planned to show an increase of 7.1%.

"Now, the program of hydraulic fracturing is under a threat. Foreign contractors will not work in the conditions when they are accused by our PGO for their work. If we do not manage to extract 200 million cubic meters of gas because of blocking by the PGO, these are additional costs of up to UAH 1.3 billion for the purchase of imported gas by Naftogaz. A loss for the national budget is up to UAH 281 million of unpaid royalty," he said.

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