OREANDA-NEWS. April 27, 2010. Ukrnafta <UNAF UK HOLD>, Ukraine’s largest oil company, finished the first quarter of 2010 with profits of UAH 718.2mn against the loss of UAH 305.7mn in 1Q2009, and increased its net sales by 175.53% y/y to UAH 3,246.142mn. Ukrnafta finished the year 2009 with the net income of UAH 378.783mn, which is 6.15% higher than that of 2008.

Millennium Capital sees this news as positive. Please remember that Ukrnafta’s major shareholders are NJSC Naftogaz of Ukraine(50%+1) and entities affiliated with Privat Group (42%). Despite the act that Naftogaz owns a controlling stake, all operational control is actually performed by Privat Group. This situation in which Privat Group buys all Ukrnafta’s oil at prices below market prices and transports it to its refineries, is not acceptable for the new government, so now the Ministry of Fuel and Energy is trying to artificially create unfavorable conditions in the oil market so as to driving Privat Group from the leadership of the company. Millennium Capital believes it will benefit Ukrnafta, allowing it to sell their products at market prices, and reinvest the additional proceeds into new oilfield search and development.