OREANDA-NEWS. February 03, 2010.Ukrainian Interbank Currency Exchange held an auction for Ukrnafta crude oil (UNAF extracts 87% of Ukrainian oil, with Privat Group owning a 42% stake in the share capital of the Company). The only buyers for these lots were “Rializ Oil” (which is a part of Privat Group) and “Gals K” (it has friendly relations with Privat Group). The average price for oil was UAH 3.3thd per tonne. On that day, UNAF failed to sell gas condensate through a tender bids auction. Due to the competition among the oil traders, the prices of all the lots jumped 30% up on the starting price, due to which the offers were withdrawn from sale.

Millennium Capital thinks the results of this auction are negative for Ukrnafta, because the continuation of the previous practice of selling crude oil at reduced prices has and adverse effect on the Company’s investment attractiveness. Millennium Capital cannot stress enough that in case the pricing policy of the Company remains as it is today, and the price for the UNAF oil continues to be low by comparison to the crude oil world market prices, instead of the benefits from UNAF operations being distributed among all the shareholders of the Company, only one of them stands to gain from the current situation, namely, the one shareholder who controls the operations of the Company.