17.11.2015, 23:07
Naftogaz Released 2014 Annual Report for Its Western Stakeholders
OREANDA-NEWS. Naftogaz of Ukraine, one of Europe's largest vertically integrated oil and gas companies, has published today its first detailed annual report in English. The accompanying audited consolidated statements for 2014 were released on 29 September 2015. The report is available at this link.
The annual report of Naftogaz is published with a several months delay compared to the international best practices for major companies. However, with this document the management initiated a much more detailed disclosure of the group's core activities than ever before. The financial statements are based on new valuations of the group's property, plant and equipment performed by EY and of the group's oil and gas reserves prepared by Ryder Scott Company. These valuations were last made in 2009.
Some data have never been disclosed before and were compiled specifically for this report. In particular, PWC has conducted a detailed analysis of the group's account receivables.
This year the report comprises not only audited consolidated financial statements but also details about the group's structure, its strategy and results in the past 1,5 years.
The period covered in the annual report has been truly transformational for Naftogaz. The decade-long policy of gas-related populism and the resulting gas pricing distortions in Ukraine have led Naftogaz to the perpetual dependence of on the state budget support, the accumulation of multi-billion-dollar obligations and the abundance of corrupt intermediaries in gas trading. In addition, Ukraine was almost entirely dependent on Russian gas imports and had to buy gas at inflated prices.
The inability of the previous governments and Naftogaz managers to resolve these issues, as well as the Russian military aggression against Ukraine, resulted in a record loss of UAH 88.4 billion (USD 5.6 billion at the prevailing exchange rate) in 2014.
During the reporting period, on the backdrop of a drastic devaluation the Ukrainian hryvnia, Naftogaz had to deal with its sizeable maturing obligations (mostly foreign-exchange denominated), cover gas bills unpaid by the previous management and secure financing to accumulate gas in the underground gas storages in sufficient volumes for the country to safely pass the 2014-2015 winter season.
Taking into account the unilateral 80% increase of the Russian gas price by Gazprom in April 2014, Naftogaz had to cover a deficit of over UAH 142.0 billion (USD 9.0 billion).
Due to the activities of the new management team, in particular, its successful efforts in reducing the cost of gas imports for Ukraine, this deficit was reduced by nearly 25% - to UAH 108.6 billion (USD 6.9 billion). Approximately UAH 96.6 billion (USD 6.2 billion) was covered by the state, and the rest by refinancing or restructuring of the group's loans.
The annual report of Naftogaz is published with a several months delay compared to the international best practices for major companies. However, with this document the management initiated a much more detailed disclosure of the group's core activities than ever before. The financial statements are based on new valuations of the group's property, plant and equipment performed by EY and of the group's oil and gas reserves prepared by Ryder Scott Company. These valuations were last made in 2009.
Some data have never been disclosed before and were compiled specifically for this report. In particular, PWC has conducted a detailed analysis of the group's account receivables.
This year the report comprises not only audited consolidated financial statements but also details about the group's structure, its strategy and results in the past 1,5 years.
The period covered in the annual report has been truly transformational for Naftogaz. The decade-long policy of gas-related populism and the resulting gas pricing distortions in Ukraine have led Naftogaz to the perpetual dependence of on the state budget support, the accumulation of multi-billion-dollar obligations and the abundance of corrupt intermediaries in gas trading. In addition, Ukraine was almost entirely dependent on Russian gas imports and had to buy gas at inflated prices.
The inability of the previous governments and Naftogaz managers to resolve these issues, as well as the Russian military aggression against Ukraine, resulted in a record loss of UAH 88.4 billion (USD 5.6 billion at the prevailing exchange rate) in 2014.
During the reporting period, on the backdrop of a drastic devaluation the Ukrainian hryvnia, Naftogaz had to deal with its sizeable maturing obligations (mostly foreign-exchange denominated), cover gas bills unpaid by the previous management and secure financing to accumulate gas in the underground gas storages in sufficient volumes for the country to safely pass the 2014-2015 winter season.
Taking into account the unilateral 80% increase of the Russian gas price by Gazprom in April 2014, Naftogaz had to cover a deficit of over UAH 142.0 billion (USD 9.0 billion).
Due to the activities of the new management team, in particular, its successful efforts in reducing the cost of gas imports for Ukraine, this deficit was reduced by nearly 25% - to UAH 108.6 billion (USD 6.9 billion). Approximately UAH 96.6 billion (USD 6.2 billion) was covered by the state, and the rest by refinancing or restructuring of the group's loans.
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