News (#10 October 2015)

BIZNEWS

Privatization

Plans from big privatization

According to Ihor Bilous, head of the State Property Fund (SPF) of Ukraine, there are plans to raise UAH 20-30 billion through big privatization. Along with the state-owned enterprises planned for the privatization which were named earlier, Sumykhimprom and Zaporizkyi Titanium and Magnesium Plant could also be put up for sale. The said companies will be included in the privatization list if the government doesnt decide to unite assets in the titanium sector.

Along with the sale of large facilities for privatization, the SPF plans to sell smaller ones this year for around UAH 1 billion. This relates in the main to combined heat and power plants.

Insurance

Export risks are to be insured in Ukraine

An agency which is to be established in 2016 will insure exporters risks. Nataliya Mykolska, Ukraine Trade Representative, reports that the project to set up the export agency is almost completeand will be brought to the government for consideration. According to Mrs. Mykolska, the main initiative of the project is the agency which exclusively insures export risks. Exporters credit granting remains are to be provided by the state-owned Ukreximbank. The sum of the authorized capital of the organization is still under discussion.

Oil & Gas

Fitch expects Russias oil production to dip due to sanctions

Fitch Ratings says that oil production in the strategic Russias oilfields in Western Siberia is likely to dip in the near term. Fitchs experts note that an oil price recovery would slow down the dip in oil production at the abovementioned fields, where the main share of Russias oil is produced.

The report says that in the first half of 2015 JSC Lukoil, the second largest Russian oil production company, saw a fall of 4.3% in oil production compared to the same period of the previous year.

JSC Rosneft, the main oil production company in Russia, showed the production in Western Siberia dipped by 3.2% compared to the same period of the previous year.

The report states that if the sanctions remain, they will affect the oil production in the medium term. Thus, the Lukoil and Rosnefts oil production in Western Siberia is expected to keep dipping by 3-4% a year, it says.

Shell to share its shale gas production exploratory studies with Ukraine

In June Shell made a decision to leave the project of shale gas field development in the Kharkov and Donetsk Regions of the country. Exploratory studies made by the British-Dutch Corporation in the process of exploration for unconventional hydrocarbon fields in Eastern Ukrainian is to be transferred to the State of Ukraine, that is, directly to the Nadra Yuzovskaya Company. Yaroslav Klimovich, head of the board in NJSC Nadra Ukrayny, reports that Shell spent significant funds on the projects development, particularly for buying equipment and explorative activities. In spite of the zero result obtained by the company, there are no provisions for any payback. And Shell is to use the clause of the agreement on sharing produced goods which provides for long-time force majeure. To regulate issues related to leaving the project, Ukraine and Shell are to sign an Addendum to the Agreement.

Banking & Finance

Ukraine to receive foreign currency swap from Sweden

The National Bank of Ukraine has concluded the Agreement on Foreign Currency Swap with the Swedish National Bank. The Agreement provides for the buying and selling of up to USD 500 million in exchange for Ukrainian Hryvnia. The Agreement is aimed at building trust in the economic reform program of Ukraine. The funds of the swap are supposed to replenish Ukraines international reserves.

Customs

Unified formula of customs clearance for goods

The Cabinet of Ministers of Ukraine has approved indicative plans of customs profits and implemented the unified form of customs clearance for goods in Ukraine in terms of anti-corruption activities in fiscal bodies. The government also made a proposal to introduce an experiment for one of the customs. The experiment is to share the customs profits exceeding the indicative indexes as follows: 50% to the local budget and 50% to the state budget.

M&A

Wolters Kluwer exits Russia

Wolters Kluwer Legal & Regulatory Solutions has signed an agreement to sell its 55% interest in Wolters Kluwer Russia Publishing Holding to the companys minority shareholders. The holding company owns 100% of the Russian legal and regulatory business, MCFR.

The divestment, which is subject to closing conditions and is expected to close in the near term, has been precipitated by impending limits on foreign ownership in Russian media companies.

In 2014, the Russian business was fully consolidated in the Wolters Kluwer accounts and had revenues of EUR 39 million. The divestment is expected to result in a one-time net loss of approximately EUR 18 million, of which the majority is foreign exchange related.

The European Commission clears acquisition of BG Group by Royal Dutch Shell

The European Commission has approved the acquisition of BG Group by Royal Dutch Shell under the EU Merger Regulation. The Commission concluded that the takeover would not lead to Shell benefiting from market power in a number of markets, namely oil and gas exploration, the liquefaction of gas and the wholesale supply of liquefied natural gas (LNG). Moreover, the Commission found thatShell would be unable to shut out its competitors from access to its liquefaction facilities that supply LNG into the European Economic Area (EEA) or from gas transportation and processing infrastructure in the North Sea.

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