A brief interview with the Chairman of the Supervisory Board of PJSC Ukrnafta Duncan Nightingale on the sidelines of Ukraine House Davos

Text: Dmytro Koshovyy

 

For the upcoming five years, Ukrnafta is creating a strategic investment plan. Would you kindly let us know what stage you are currently in?

This is among the Supervisory Board's primary goals.

The five-year Strategic Investment Plan is nearly finished. Based on the feedback from shareholders, a few small changes need to be made.

What will it contain, specifically?
The budget and work schedule outlined in the Five-Year Investment Plan will enable Ukrnafta to carry on with its operations, boost production, drilling scopes and reserves replacement ratio, contribute to net profit, and pay dividends to shareholders, and taxes to the Ukrainian budget.
The primary goal is for the Company to continue to grow, develop, and showcase appealing economic projects, fulfilling its primary role during the war.

 

Have you received an expectation list for these plans?
I know the government is debating the list, which will most likely be presented to the Ministry of Defence and Naftogaz, the shareholders, first.
Ukrnafta will then be consulted over the list.

Is there an action plan for Ukrnafta or a framework of expectations for Naftogaz?
True. Naftogaz is one of the shareholders of Ukrnafta also engaged in hydrocarbon production. Therefore, Ukrnafta's results are part of the production growth plan. 

We play a significant role in Naftogaz's investment strategy.

 

Ukrnafta has signed an agreement with the EBRD to finance the construction of gas generation. What other projects do you have planned that will require external funding?

Indeed, we have just signed a loan agreement with the EBRD. Additionally, to the loan, we also get grant funding from the EBRD totalling several dozens of millions of euros, for which we are extremely grateful to the Bank and the donors. All of these funds will be used to construct gas-fired power plants. We want to install roughly 375 MW of new gas-to-power generation in the first phase.

Furthermore, we are trying to raise funding for the development of alternative energy infrastructure, such as wind and solar power plants. We intend to deploy roughly 200 MW of renewable generation over the next two years.

Our initial plan for 2028 calls for the introduction of solar electricity and around one gigawatt of new power and heat generation, both of which will demand significant investment.

 We intend to raise funds from national and international banks and investors as well as from our current donors. Energy projects should be self-sufficient, including in terms of obtaining funding, and the Company's funds should be used for the primary objective of growing hydrocarbon recovery.

Taking this opportunity, I would like to thank investors for their support as we build gas generation.

Ukrnafta recognises the value of conventional energy sources, particularly during martial law. At the same time, we generate electricity using gas as a transitional fuel. This enables us to develop future environmentally sustainable solutions.

In terms of corporate governance, Ukrnafta presently has a CEO and a Supervisory Board. Will a Management Board be established?

In 2024, Ukrnafta elected a new Supervisory Board, consisting of five members. It includes two representatives from the shareholders, the Ministry of Defence of Ukraine and NJSC Naftogaz of Ukraine, as well as three independent directors from Norway, the United Kingdom, and Canada.

Together with the management of Ukrnafta, we are actively working to apply OECD best practices.

Additionally, we are putting European non-financial reporting regulations and ESG best practices into effect. We are working on the ESG development strategy and intend to introduce it this year. We appreciate USAID's assistance with this endeavour.

Regarding the Board, we are currently choosing candidates for the positions. Within the following two to three months, we want to finish this procedure.

In parallel, we are collaborating with our shareholders to create a new Company Charter that adheres to industry best practices.

 

Ukrnafta was one of the top companies on the Ukrainian stock market in the 1990s and early 2000s. What is your opinion on the likelihood of the Company going back to the stock exchange?

I am unable to provide further details at this time. The shareholders' choice and the Ukrainian government's plan will determine if “Ukrnafta” becomes public again.

Ukraine is now addressing more pressing operational concerns. Thus, this matter is not a top priority. As the post-war reconstruction process progresses, I anticipate that its significance will increase.

 

Regarding the deal with Shell to purchase 51 per cent of the Ukrainian network. Do you intend to purchase the remaining 49%?

Our first priority is to finish the 51% acquisition. This topic hasn't been brought up yet.

Do you think the Davos Forum will show any interest in Ukraine and Ukrnafta?

People's level of motivation and interest in this Forum is one of its key features. They acknowledge Ukrainians' resourcefulness, inventiveness, bravery, and dedication in surviving the conflict and preparing for the post-conflict restoration.

There are enormous investment options available both domestically and abroad.

Ukrnafta is considering making investments in oilfield services, joint ventures, production, field development, and exploration. We also intend to construct new pipelines, develop the medium-term aspects, etc. Renewable energy is another crucial field. To broaden the Company's horizons, we are dedicated to implementing the advanced technologies.

As the peace process becomes more transparent, investment opportunities will increase. It is therefore critical that investors recognise Ukraine's potential and get ready to help it restore.