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    Diesel and butane prices are to rise this week in the wake of Russias June 1 bans on energy exports to Ukraine. Last week, Ukrainian producers of liquefied petroleum gas increased their prices by 30%, Sergei Fedorenko, commercial director of UkrGazVydobuvannya, writes on Facebook. Kazakhstans Tengizchevroil had to suspend shipments of LPG to Ukraine last week after Russia refused to allow transit. The company accounts for about 15% of Ukraines LPG.

    With Russia and Belarus a transit country supplying about 80% of Ukraines petroleum imports, consumers should prepare for price hikes and price gouging, warns Ukraines Antimonopoly Committee.

    Truckers and weekend barbecuers should prepare for shortages and higher prices, Oleskandr Danylyuk told reporters on Saturday. Diversification options exist, says Danyluk, the new secretary of the National Security and Defense Council. Some may take time, some simply lead to an increase in the cost of the product, such as gasoline. Easing pressure on Ukraine, the price of Brent crude oil fell to the lowest level in three months, about $65 a barrel.

    Burisma Group plans to build a $25 million plant capable of producing 50,000 tons of liquefied petroleum gas a year, reports Nefterynok. The natural gas would come from Burismas field in Kharkiv region.

    After no foreign energy companies bid for oil and gas licenses at two auctions this spring, five Western companies are among the 13 bidders for the 50-year oil and gas production sharing agreements. With bidding closed, the foreign bidders are: Vermilion of Alberta, Canada; Aspect Energy of Denver, Colorado; SigmaBleyzer, of Houston, Texas; Nafta of Slovakia; and EPH, or Energetick a prmyslov holding, a.s., of the Czech Republic. reports that Ukraines Intergovernmental Commission is to evaluate bids in June and make its recommendations for winners to the Cabinet of Ministers.

    Russias Transneft pipeline firm says it shipped west only 3 million tons of contaminated oil, not the 5 million estimated by Belarus, Moscows Kommersant newspaper reports. Sergei Andronov, vice-president of Transneft, says the pipeline cleanup should be completed by the end of this year. Because of the dirty oil problem, Russias oil output fell to 11.1 million barrels per day in May, the lowest level in a year, reports Reuters.

    Tainted Russian oil threatens to pollute politics of gas headlines a Financial Times opinion piece. The crisis has undermined the notion that Moscow is a reliable and dependable supplier writes Henry Foy, the newspapers Moscow bureau chief. The PR impact and blow to Russias reputation has spread further than the contaminated supplies ever got, at a critical time for Moscows image.

    Alibaba and other large Chinese companies are interested taking part in a possible privatization of Ukrposhta, Igor Smelyansky, CEO of the national postal operator, writes on Facebook. Alibaba warehouses and its logistics are being built in Russia, Belgium, Latvia, Estonia (and soon in Africa), but not here, Smelyansky writes of the world's largest retailer and e-commerce company. Alibaba likes to work through partners and share risks with them. But they want certainty, understandable strategies and clear rules at customs.

    During the first four months of this year, Ukraines agricultural exports increased by 19% to $7.1 billion. Sales were up $1.1 billion from January-April of last year. With farm products the nations top export item, the main destinations were: Asia 42%; EU 33.5%; Africa 16%; and former Soviet Union 7%.

    Dragon Capitals Ukraine real estate fund earned a net profit of $3.17 million last year, turning around a 2017 net loss of $4.85 million. According to a filing on the London Stock Exchange, net asset value fell by 15%, to $36.2 million, due to a distribution of $9.8 million to shareholders of the Ukrainian Real Estate Investment Fund Dragon Ukrainian Properties and Development Plc. Dragon Capital Investments owns 61% of the fund.

    Ukraine is fighting two wars with Russia and with corruption, President Zelenskiy told US Senator Robert Portman on Thursday. We have two wars a war with Russia and a war with corruption within the country, which is a threat, first of all, for the economy of Ukraine, Zelenskiy told the visiting senator, a Republican from Ohio. The next day, Zelensky with heads of two key anti-graft agencies and demanded tangible results of the investigation into high-profile corruption in the next three months. He met with Artem Sytnyk, head of the National Anti-Corruption Bureau of Ukraine, and Nazar Kholodnytsky, head of the Specialized Anti-Corruption Prosecutors Office.

    Kristina Kvien, the U.S. new acting ambassador, or Charge dAffaires, starts work in Kyiv this week. Moving from Paris, where she had the number two job at the US embassy, Kvien has served as economic counselor at the US embassies in Paris, London and Bangkok. She has served at the US embassy in Moscow and has an MS in Strategic Studies from the U.S. Army War College.

    President Zelenskiy visits Brussels tomorrow and Wednesday for talks with EU and NATO officials. He also has been invited to visit Paris, Washington and Toronto this summer.

    Bolstered by a surge in e-Residents of Estonia, the Ukrainian-Estonian Chamber of Commerce has opened in Tallinn. Aimed at IT entrepreneurs, the e-Residency program gives non-Estonians access to Estonian services such as banking, company formation, and payment processing. To date 3,431 Ukrainians are e-Residents of Estonia, the third largest group of foreigners. Ukrainian e-Residents have founded 729 companies, the largest for any nationality. Wizz Air flies to Tallinn from Kyiv Sikorsky and Estonias Nordica flies from Kyiv Boryspil.

    Lviv Airport handled 51% more passengers during the first five months of this year, than during the same January-May last year. With 90% of passengers flying on international routes, the airport served 722,300 passengers. For comparison the airport handled 708,000 for all of 2013. Lviv now has direct flights to 32 foreign cities, largely in the EU. On June 14, Earnest launches a Lviv-Venice flight. On July 21, Jonica launches a Lviv-Athens flight.

    Flixbus, Europes largest bus operator, plans to announce next week major expansion of its bus service between Ukraine and the EU. Based in Germany, Flixbus operates in 28 countries, serving 2,000 cities. In 2017, it started several routes to Ukraine. Last year, it opened in the United States, largely serving American border states from Los Angeles.
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      Russia has slashed monthly diesel exports to Ukraine to 25% of normal levels and liquefied petroleum gas exports to 40% of normal levels, reports Sergey Kuyun, director of Ukraines A-95 energy consulting group. To maximize market tension, Russias Economic Development Ministry will set levels of permitted exports each month.
      In face of Russias cuts, Ukraines diesel prices could go up another 5% this summer, to 31 UAH the liter, Kuyun writes on Facebook. With most consumer goods moving around the country by truck this could imperil Ukraines goal to end this year with inflation at 6.3%. After the Kremlin announced the restrictions on April 18, diesel prices rose by 4%. With the June 1 export restrictions, Ukraine loses 25% of its diesel and 15% of its LPG. Is it a lot or a little? asks Kuyun. For diesel fuel - a lot. For gas - less, but also not easy.
      Easing economic pressure on Ukraine, European oil prices have receded to February lows.August futures for Brent on the London Stock Exchange ICE Futures traded Monday evening at $61.62 per barrel.
      Pumping gas into storage at record rates, Ukrtransgaz has filled Ukraines 12 storage reservoirs to 37% of their 31 billion cubic meter capacity. After the national heating season ended April 5, the state pipeline company started filling the reservoirs, preparing for a possible end of Russian gas transit across Ukraine on Jan. 1. Separately, from January to April, natural gas production in Ukraine grew by 3.6% y-o-y to 7 billion cubic meters, the Energy and Coal Industry Ministry tells Interfax-Ukraine.
      DTEK Group cut its coal imports by 24% during the first quarter, compared to the same period last year. The 225,000 ton drop in imports was partly covered by switching to gas and partly by expanding DTEKs coal production by 1.35%, to 6.5 million tons.
      Last years record 70 million-ton harvest may be the new normal for Ukraines top export grain. With spring sowing completed, farmers seeded 14.8 million hectares, the same amount as last year, reports the Agrarian Policy and Food Ministry. Noting that favorable weather allowed farmers to start planting one month earlier than last year, Deputy Minister Volodymyr Topchiy says: "The period of hibernation was favorable, and the spring weather conditions were better than in can expect that the harvest of early grains in 2019 will not be lower than last years.
      The ministry predicts this year grain harvest will hit 70.8 million tons. The USDA predicts 72.1 million tons.
      While this years grain harvest may match last years in size, the crop mix will shuffle as farmers look for highest prices. King corn will shrink by 7%, to 33.1 million tons, predicts APK-Inform consultancy. Wheat will increase to 26.2 million tons and barley will increase to 7.9 million tons. Sunflower seed harvest will stay virtually the same, at 14.9 million tons. As a result, sunflower oil exports will be unchanged 5.9 million tons. Soybean production is to drop by 20%, to 3.7 million tons. In compensation, canola production is to go up by 29%, to 3.6 million tons.
      Ukraine could export a record 50 million tns of grain in the 2018/2019 marketing year that ends this month, predicts Dragon Capital. With 46.1 million tons of grain exported as of June 1, Dragon sees: exports for the full marketing year to 49-50 Mt, up 23-25% yo-y and a new record high.
      Grain exports through Ukraines ports have grown by 45% since 2012, Andrew Shklyar, head of CTS-Consulting said last week at the Ukrainian Ports Forum. Over the past five years, grain is the only type of cargo that has been growing annually, he said in Odesa. The volume of grain shipments since 2012 has increased from 27.5 million tons to 40 million tons in 2018. Grains make up almost a third turnover of Ukrainian ports.
      To catch up, companies are investing to move the grain to ports and to export the grain to the world.
      Risoil SA increased grain exports from its terminals by 150% to 1 million tons during the first five months of this year, compared to the same period last year.
      South Koreas Posco International plans to inaugurate next month in Mykolaiv a grain handling terminal with 140,000-ton storage capacity.
      Posco, Frances Soufflet Group and Ukraines Astarta are in various stages of creating their own fleets of grain hopper wagons for rail transport.
      Hollands Louis Dreyfus Company expects to win from the EBRD a $35 million loan to buy 1,000 rail grain wagons for use in Ukraine. Louis Dreyfus has warehouses in Vinnytsia, Cherkasy and Zaporizhia and a port complex in Odesa with a storage capacity of 240,000 tons.
      Ukrzaliznytsia held two ProZorro auctions in March, auctioning 24 grain routes, with a total 1,296 cars. Although the new electronic system bids up shipping costs, it gives shippers peace of mind, knowing that freight trains are to arrive on time, in working order.
      The Turkey-Ukraine free trade pact is 99% negotiated, Vasiliy Bonday, deputy foreign minister tell Ukrainian Radio. Sticking points are several agricultural products and some services, he said. Last fall, Turkish President Recep Tayyip Erdogan said talks should be completed by the end of 2018.
      Air Serbia flew from Belgrade to Kyiv Monday, renewing a route dropped three years ago. The return of flights to the largest city in the Balkans is part of a mini boom in flights to the long overlooked region. This summer, Windrose has flights from Kyiv to Pula, Croatia and to Tivat, Montenegro. SkyUp has seasonal charters to Tivat; Tirana, Albania; and, starting Thursday, to Split, Croatia. This spring Ryanair and Wizz Air launched flights from Kyiv to Athens, competing with UIA. Ten days ago, Wizz Air launched flights fro Kyiv Sikorsky to Thessaloniki, northern Greece.
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        Wednesday, June 5
        Zelenskiy Slaps Down Kolomoisky...US LNG Breaks Russias Gas Monopoly in Bulgaria...Norwegians and Chinese Build Big Solar Plant in Mykolaiv...MHP Builds Largest Poultry Plant in Europe...UZ Mulls Private Trains on the Boryspil Express
        By James Brooke
        President Zelenskiy, on his first trip to Brussels as Ukraines leader, clearly distanced himself from his main campaign backer Igor Kolomoisky. Kolomoisky bought PrivatBank, Ukraines largest bank to bankruptcy, a path he advocated for Ukraine in an interview with the Financial Times.
        As for Privatbank, I will protect only the state, only citizens. I am not interested in these games of the former owners in the courts. I am not going to be on their side, Zelensky said during a meeting Tuesday with Valdis Dombrovskis, the European Commissions vice president for the Euro. After Ukraine nationalized PrivatBank and injected $5.5 billion in December 2016, Kolomoisky filed 240 cases in Ukraine and abroad to try to get the bank back.
        As for Kolomoiskys argument that Ukraine should follow the default paths of Greece and Argentina, Zelenskiy was equally dismissive: As for the default, theseare rumors. These are well-thought-out actions that have nothing to do with my official position.
        Separately, in Brussels, President Zelenskiy told Polish President Andrzej Duda on Tuesday that Europes energy independence from Russia is crucial. He said: One of the important areas of our common interaction at the European level is the issue of energy security, preservation of the strategic role of the Ukrainian GTS and counteraction to Nord Stream 2.
        Breaking Russias monopoly on gas exports to Bulgaria, the Black Sea nation plans to receive two LNG loads of American gas this year via Revithoussa Greeces only LNG terminal. Bulgarias Energy Minister Bulgarian Energy Minister Temenuzhka Petkova tells reporters that the first tanker has arrived at Revithoussa, an island 30 km west of Athens. The US suppliers are: BP America and Cheniere Energy, of Houston.
        Norways Scatec Solar and PowerChina Guizhou Engineering Co. Ltd. have started to build a 124, 148 MW solar power plant in Prohressivka, 100 km west of Mykolaiv city. PowerChina is covering 65% of construction costs of the station, which is to be ready by next June. For commissioning this year, before the green tariffs expire, Scatec is building two other solar plants: a 47 MW station in Mykolaiv and a 30 MW station in Kamyanka, Cherkasy.
        Meeting one IMF demand, President Zelenskiy submitted his draft law on illegal enrichment to the Rada on Monday. The bill is to replace a law ruled unconstitutional by the Constitution Court in February. The Zelenskiy version proposes punishing public officials who possess unexplained assets exceeding their official income by UAH 204,000, or $7,520. Penalties would be five to 10 years in jail, confiscation of property,and a ban on holding public office for three years.
        Concorde Capitals Zenon Zawada writes: Its positive to see the Zelenskiy administration take a proactive approach to this legislation, submitting it to parliament promptly... this simple legislation is a source of optimism for the investment community.
        Ukraines Constitutional Court will hold hearings next Tuesday on the legality of Zelenskiys move to advance Rada elections by three months. Parties already have held congresses and selected candidate lists for the July 21 elections. The constitutional challenge was brought by a group of Rada members. The Court classified the case as urgent -- but did not give a judgement date.
        A fire destroyed a 15,000 square meter henhouse containing an estimated 2.5% of the hens of Ovostar Union, one of Europes five largest egg producers. The fire on Tuesday hit Ovostars unit in Vasylkiv, about 50 km southwest of Kyiv.
        Ukraine could start exporting eggs to the United States this year, part of a major drive that sends Ukrainian egg products to 60 countries worldwide. Last year, exports were up 20% y-o-y, to 1.8 billion eggs, according to an industry overview in UkrLandFarming, parent of Avangard, a major egg producer, plans to invest over $200 million in a terminal to handle its egg exports to 40 nations worldwide.
        Through April, poultry meat exports were up 40% to $199 million, compared to January-April oflast year, reports Ukraines Association of Food Industry Producers. During 2018, poultry exports rose 21% in volume, to 329,000 tons and by 30% in monetary terms, to $507 million, according to the State Fiscal Service. So far this year, the top buyers are: Saudi Arabia - $55 million; Netherlands -- $33 million; and Slovaki $20 million.
        MHP is building in Vinnytsia the largest poultry farm in Europe,World-Grain reports, citing Yuriy Kosiuk, the company founder/CEO. Located in central Ukraine, this project represents a major expansion of an existing poultry farm to 560,000 tons of broiler meat a year.
        Thanks to MHP exports, Ukraine became last year the third largest supplier of poultry meat to the EU and the sixth largest poultry exporter worldwide. According to Sergey Karpenko, general director of the Ukraine Poultry Union, the nations biggest sales markets are: The Netherlands, Iraq, Saudi Arabia and Slovakia.
        The EBRD is reviewing a 100 million loan request from MHP to buy a 91% stake in Perutnina Ptuj, Slovenias main poultry producer.Some media reports that the EBRD allegedly rejected this project are not true, Anton Usov, the EBRDs regional spokesman, tells Interfax-Ukraine.
        Prior to Austrias May 26 European Parliament elections, Kurier, a major Vienna newspaper, ran an article charging MHP was ducking EU quotas on chicken fillet imports by sending half-processed chicken cuts to its EU factories for final processing. The newspaper announced: The KURIER managed to uncover the export tricks of MHP...when cutting the birds in Ukraine, a bone remains on thechicken breasts.
        In response, Sergii Karpenko, executive director of the Poultry Union, said Ukraines goal is to deliver quality poultry products at affordable prices for our consumers. He told GlobalMeat news site: Unfortunately, we have seen a rise in anti-Ukrainian rhetoric ahead of the European elections later this month. We regret that fake news, misinformation and wilful inaccuracies are freely used now in the debate about European poultry.
        After Boryspil airport handled a record 52,000 passengers on Sunday, Evhen Kravtsov, CEO ofUkrzaliznytsia, suggests a radical expansion of the train to the plane, including private trains on the 35-minute route from Kyivs Central Railway Station. Instead of the current single and double wagon self-propelled trains, 5-car trains carrying 500 passengers could ply the route, marketed as the Boryspil Express. Since the route is only partially electrified, the locomotives could either be diesel or electric with on-board energy storage, allowing for autonomous travel. Six months after inauguration, the Boryspil Express now carries 3,000 passengers a day.
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          During one decade 2006 to 2016 -- Ihor Kolomoisky and Gennady Bogolyubov, the former co-owners, of PrivatBank, laundered $470 billion about four times the GDP of Ukraine through PrivatBank Cyprus to the United States, according to one analysis of the 104-page civil case filed two weeks ago in US court by the new management of PrivatBank against the former owners. If this is true, this is the biggest case of money laundering in history, and it has been perpetrated by one single group, Anders Aslund writes in How Kolomoisky Does Business in the United States an article posted on the Atlantic Council Ukraine Alert Blog. With the money invested in US real estate and ferroalloy companies, this massive stripping of assets from Ukraine would help explain the nations chronic capital shortage in recent years.
          The Finance Ministry doubled its bond sales at Tuesdays weekly auction,raising in equivalent UAH 8.4 billion, compared to UAH 3.8 billion last week. Purchases of hryvnia bonds recovered by 43%, compared to last week, hitting UAH 2 billion. Reflecting growing
          confidence in exchange rate stability, two bidders bought 3 year bonds for UAH 573.4 million at 17%. One-third of auction receipts -- UAH 609 million came from the sale of 1 year bonds to seven bidders at 18.5%. On Wednesday, Finance Minister Oksana Markarova told the Cabinet: We are increasing our debt share in the national currency.
          Dragon Capital writes: Modest demand likely reflects a combination of technical issues related to Clearstreams launch, UAH weakness -3.6% in the past two weeks, to UAH 27.13:USD...we expect demand for UAH bonds to pick up in the coming weeks, including on the side of non-residents.
          Over the next four years, the hryvnia will gradually devalue against the dollar, moving from UAH27/$1 today, to almost UAH31/$1 in 2022. The projection is part of the governments debt management strategy adopted Wednesday by the Cabinet of Ministers. In Feb. 2016, the exchange hit UAH27/$1. Since then, it has varied within a narrow band. According to the government forecast, the US dollar will cost: 28 hryvnia at the end of this year; 29.4 hryvnia in 2020; 30.5 in 2021; and 30.7 in 2022. GDP growth is forecast at: 2019 - 2.8%; 2020 - 3.3%; 2021 - 3.8%; and 2022 - 4.1%.
          Ukraine plans to cut government debt ratio to 52% of GDP this year and to 43% of GDP by 2022, Finance Minister Oksana Markarova told a televised Cabinet meeting on Wednesday. Building on a stable foreign exchange outlook, the government also plans to increase its share of hryvnia debt.
          The EU is renewing its offer of 500 million in aid this year, contingent on Ukraine fulfilling the requirements set out last year in the EUs fourth macro-financial assistance program to Ukraine. Valdis Dombrovskis, a European Commission vice president for financial affairs, reviewed the conditions Tuesday in a meeting in Brussels with Ukraines new president. Earlier, in March, Finance Minister Oksana Markarova with Dombrovskis and said later that Ukraine had fulfilled more than half of the commitments required to receive the 500 million tranche.
          Through May, the first time registrations of used imported cars were seven times higher than registrations of new imports, reports Ukravtoprom, the industry association. Boosted by a January-February tax amnesty for illegally imported cars, the used car registrations hit 231,000, seven times the number for the January-May period of 2018. Ukraines lowered import duties and Germanys phase-out of diesel cars keep the used car market hot. In May, used cars accounted for three-quarters of the 31,000 cars registered for the first time.
          Used Hyundai and KIA cars will be imported from South Korea by the AIS Group of Companies, a major auto dealer in Ukraine. Starting this month, AIS will import global models fabricated between 2011 and 2014, with mileage below 200,000 km. Unlike US auctions, which mainly offer cars after an accident, official Korean suppliers offer cars that do not require rebuilding, Sergei Borovik, AIS marketing director, said in a company press release.
          Naftogaz is lowering its gas prices by 23% from May to July. This government-mandated drop comes after the EU natural gas import price has fallen to one half of last falls levels. Today, the EU price is $4.34 per MMBtu, the lowest level since Sept. 2016. But Ukraine price has been stuck at last falls peak, $8.3 per MMBtu. At that time, the government sought to eliminate subsidies by moving Ukraines prices toward EU levels.
          In pushing for cutting prices to EU levels, Prime Minister Groysman called Naftogaz an insatiable monopoly. Talking at Wednesdays Cabinet meeting, he said: Naftogaz has approved prices for June that are higher than the market ones. They plan to do the same with July prices. This is unacceptable. Last week, the Rada refued to accept Groysmans resignation. Now, he is running for an opposition seat in parliament while serving as Prime Minister.
          A new poll indicates President Zelenskiys Servant of the People party is within striking distance of winning a 50% majority of the Rada in next months parliamentary elections. Of decided voters, 48% said they will vote July 21 for the presidents new parties. The Russia-friendly Opposition Platform gets 11%, former president Poroshenkos European Solidarity gets 8%, and Yulia Tymoshenkos Fatherland Party get 7% of preferences. Of the 2,000 respondents to the nationwide poll, 88% want radical changes.
          Teaching business executives how to avoid corruption and how to run a business transparently are the goals of ZmiNEW, Business Ombudsman Councils new education project. After dealing with 5,600 complaints from business managers in three years, Algirdas emeta, the Ombudsman, believes training can head off corruption conflicts before they arise. At the project launching on Wednesday, he said: Our new project aims to resolve issues between the business and government by providing a platform to communicate properly and thus breaking a systemic logjam.
          In a survey of financial literacy in 30 OECD countries, Ukraine ties with Poland for last place. The Financial Literacy Index measures knowledge of basic financial knowledge terms, such as inflation and interest, attitudes, and behavior -- financial planning and saving. Compared to the 30 country average of 13.2, Ukraine scores 11.6. The leaders are: France 14.9; and Norway and Canada -- 14.6. USAID paid for the survey of 2,007 adults last December. In Ukraine, the level of confidence in banks is low. Only 12% of citizens keep savings in deposit accounts. The National Bank of Ukraine will hold a forum next Wednesday on how to get more Ukrainians to take a more active role in the economy.
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            As Russia and Ukraine brace for a winter gas war, Naftogaz needs $1 billion to fill reservoirs to the needed level this summer. Russias Gazprom has filled European reservoirs with 60% more gas than normal for this season, Andriy Kobolyev, the Naftogaz CEO, warns in a Facebook post. Russias push to stockpile in the EU is also evidenced by an 8% y-o-y rise in Russian gas volumes crossing Ukraine since January. In May, this gas transit was up 16.4%, Ukrtransgaz reports Thursday. Russia threatens to abandon its 10-year transit contract with Ukraine when it expires Jan. 1.
            If liquidity will not be resolved in the coming weeks - it will be impossible to purchase sufficient volumes of gas, Kobolyev writes. Needed money can be obtained: by postponing Naftogaz dividend payments this month, by getting payment on $2.3 billion in debts owed by regional operators; or by getting Cabinet of Ministers approval to place a Eurobond. He writes: When we need money to buy gas for the winter, this is an extraordinary challenge for us. We have to choose: dividends now -- or protection from the crisis.
            US LNG reserves are massive and will compete for head to head in Europe with Russian pipeline gas, US Energy Secretary Rick Perry vowed Wednesday at a business conference in Slovenia. This idea that somehow...LNG cant compete with pipelined gas is just false, said Perry, a former governor of Texas. The U.S. supply, the U.S. reserves of natural gas are massive...the pressure downward on the price of LNG is going to continue.
            Perry, who represented the Trump Administration at the May 20 presidential inauguration of Volodymyr Zelenskiy, told the gathering in Ljubljana: For us not to support Ukraine in every reasonable, feasible way that we can is an irresponsible act...We are not going to allow for anyone to coerce another country, particularly using energy as a weapon. It will not stand.
            Hungarys Foreign Minister Pter Szjjrt said limited pipeline connections block access to alternative gas sources. We have very nice plans on the tables, we have very nice promises...about energy ports to be built in the region, but heating flats and operating an economy cannot be based on only promises, added Szjjrt, who signed a deal in Moscow this spring guaranteeing Russian gas supplies if Gazprom stops sending gas across Ukraine on Jan. 1.
            Two hours south of Ljubljana, work has started on a 235 million floating LNG regasification terminal on Croatias Krk island, in the northern Adriatic. Planned to handle 2 billion cubic meters a year, the project is financed with a 102 million grant from the EU's Connecting Europe Facility, 100 million from the Croatian government, and 32.6 million from Croatian energy companies. Hungarian companies are interested in buying partial ownership. Due for commissioning in 2021, the Hrvatska LNG Terminal would bring bring American and Persian Gulf gas to Central Europe for the first time.
            Romanias Black Sea gas reserves could challenge Gazproms dominant supplier status in role Central and Eastern Europe, according to a report by consultancy Deloitte. The Neptun Deep project is designed to tap into a field holding up to 84 billion cubic meters of gas, earning Romanias government $26 billion over the next two decades. This production could eventually supply Ukraine.
            Exxon Mobil Corp. and Austrias OMV Petrom SA, have put on hold a decision to develop the field. Exxon spokeswoman Julie King tells Reuters a decision depends on a liberalized Romanian gas market that enables free trade, and sufficient interconnectivity with neighboring free and liquid markets. Hungarys Szijjarto told Reuters last month in Houston, where he opened a consular office: Exxon Mobil can be the game changer in the energy supply of Europe. But they should finally make their final investment decision.
            The dominance of Ukrainian state companies in tender bids for nine oil and gas production sharing agreements is a major concern, says the US-Ukraine Business Council. Noting that state-owned UkrGazVydobuvannya participated in nine of the 22 bids, the USUBC writes: A major concern has been expressed by many energy experts about state-owned companies like UGV, being allowed to bid in a program designed to attract private international and domestic investors...State-owned companies do not need any additional privileges and incentives.
            Through May, natural gas production in Ukraine rose by 3.4% compared to the same five-month period last year, Ukrtransgaz reports. UGV lagged behind private companies, registering a 2.3% increase. UGV accounted for 73% of the 8.9 bcm produced.
            The surge of foreign buying of government hryvnia bonds does not threaten to Ukraines finances, Yakiv Smoliy, governor of the National Bank of Ukraine, told reporters Thursday.Since the beginning of the year, the inflow of foreign funds from foreign investors in comparison with the previous year has increased by almost seven times, and has reached about 40 billion UAH, the central bank head said, citing the equivalent of $1.5 billion. This portfolio is diversified in terms of time, and we do not see the simultaneous outflow of foreign investors from this portfolio...we do not see risks.
            Ukraines central bank kept its main interest rate unchanged at 17.5% on Thursday, citing the need to contain inflation risks that increased since the bank cut the rate in April. Pushing the National Bank of Ukraine to the side of caution were diesel fuel price hikes caused by Russias June export cuts and the understanding that an IMF second tranche would only come in the fall, after talks with a new government.
            Green bonds could allow Ukraine to raise $73 billion in the 2020s, Andriy Frolov, deputy head of the Energy Efficiency Reform Office, told reporters Thursday, citing an International Finance Company estimate. Accompanied by Jean-Erik de Zagon, European Investment Bank representation for Ukraine, Frolov said draft regulations under review by the Cabinet of Ministers envisage launching Ukraine green bonds as early as next year.
            If Brexit happens, Britain and Ukraine should be able to negotiate a liberal bilateral Free Trade Agreement that should increase Ukraines farm exports to Britain, Sir Malcolm Rifkind, a leading Conservative Party politician, said on a visit to Kyiv this week. Ukraine is Europes largest food exporter. Britain, with a population of 66 million, is Europes largest food importer. Standing in between are France and Germany, countries with protectionist agricultural policies.
            Effective today, Yanairs operating certificate is suspended for safety reasons, Ukraines Aviation Administration reports. With five Boeings and four Airbus, Yanair had regular and chartered flights from its Kyiv Sikorsky base to Odesa, Israel, Poland, Armenia, and Georgia.
            In the latest EU-Ukraine rail link, Ukrzaliznytsia and Slovak Railways Company start Sunday a daily train between Koice, Slovakia, and Mukachevo, Zakarpattia region. Slovak trains will run on the cross border European gauge track, originally laid during the Austro-Hungarian empire. The four-hour train will cost 7.5 and will stop in Chop (Ukraine) and ierna nad Tisou (Slovakia).
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              Ukraine accounts for 45% of the 186 active oil and gas drilling rigs active in Europe today, according to the monthly Baker Hughes European Rig Count. Russian rigs are not counted in the Europe listing. With 84 active rigs, Ukraine is stepping up exploration and production as doubts cloud future supplies from Russia.

              Six weeks before the parliamentary election, two leaders of Ukraines pro-Russian coalition flew to St. Petersburg Friday and won an offer from Gazprom CEO Alexei Miller to sell gas at a 25% discount. Miller also asked for two-way, Russia-Ukraine talks to renew Gazproms gas transit contract, cutting out the EU. Yuriy Boyko and Viktor Medvedchuk said Gazproms calculations show that Ukraines government deliberately buys gas at exorbitant prices.

              In response, Naftogaz officials said that, with European gas prices dropping, Ukraine already buys gas well below Gazproms offered discount. First, they overestimate by 100% the fair market price, and then they give a discount of 25%, Yuriy Vitrenko, Naftogaz executive director, writes on Facebook. We dont need your illusory discounts.

              Under heavy EU pressure to negotiate a new gas transit pact with Ukraine, Russias deputy foreign minister Aleksander Pankin said Thursday: No one has ever made an announcement that we will refuse [to continue gas transit]. For us, it would be deadly and irrational. Russia is on the defensive as European traders charge that Russias Transneft cost them hundreds of millions of dollars by sending west large volumes of oil contaminated with organic chlorides.

              Belarus state energy company Belneftekhim said Sunday it has partially resumed sending Russian oil west, towards Poland, aiming to ship 65,000 tons in June. To date, Belarus has shipped back to Russia 450,000 tons of contaminated oil. The state energy company says it needs two more months to clean up a key pipeline to Mazyr, one of its two refineries.

              You shouldnt yell, attack, etc., but you should take care of your interests. But you dont have to crawl on your knees, Belarus President Alexander Lukashenko advised executives of Belarus Naftan refinery Friday on how to get compensation from Russia for the contamination damage. He complained that international companies are demanding $800 million from Russia, 40times the compensation level considered for Belarus. He says: We suffered the most.

              US pressure and Denmarks recent elections may combine to delay completion of Nord Stream 2, Gerhard Schroeder, board member of Rosneft and chairman of Nord Stream AG, the gas pipeline construction consortium, told Reuters in St. Petersburg on Friday. As a result of Denmarks general elections last Wednesday, a center-left coalition is to take power. The new government is to include green MPs skeptical of Russia laying the pipeline through Denmarks Baltic waters.

              Exxon Mobil Corp. and Austrias OMV Petrom SA, have put on hold a decision to develop the field. Exxon spokeswoman Julie King tells Reuters a decision depends on a liberalized Romanian gas market that enables free trade, and sufficient interconnectivity with neighboring free and liquid markets. Hungarys Szijjarto told Reuters last month in Houston, where he opened a consular office: Exxon Mobil can be the game changer in the energy supply of Europe. But they should finally make their final investment decision.

              Russia criticizes US plans to supply gas to Europe because it fears free market competition, Frank Fannon, U.S. assistant secretary of state for energy resources, told Reuters late Thursday. Hours earlier, Igor Sechin, CEO of Rosneft accused the US of starting an era of energy colonialism, using energy as a political weapon.

              Fannon, Washingtons top energy diplomat, said: [The Russians] dont like the idea of, even the concept of, competition because it forces a change in their behavior...They prefer to operate under opaque conditions in the dark of night. Theyre fearful of the energy that the U.S. is producing and the exports. The US is the worlds fastest-growing exporter of liquefied natural gas. This year, it is to become the worlds third largest exporter of LNG, after Qatar and Australia.

              By the end of next year, all Ukrainian apartment buildings should have a gas meter for each apartment,Gennady Zubko, deputy prime minister for Housing and Communal Services, told the Rada Friday. Moving from the Soviet legacy of building-based metering, individual meters have expanded from 23% of apartments in 2014, to 80% today.

              DTEK Energy Holding plans to build Ukraines largest wind farm,Tylihulska with a 500 MW capacity, in southern Mykolaivs Berezanka district. With 130 turbines spaced 1.5 km apart, the project would occupy 35,000 hectares and require 250 km of high voltage above ground and buried cables. Taking advantage of winds blowing up the Tylihul Estuary, DTEK plans to also build Tylihulska 2, a 65 MW plant. Currently, Europes largest onshore wind farm is across the Black Sea in Romania: the 600 MW Fntnele-Cogealac project. Next year, Norway is to commission Fosen Vind, a complex of six onshore wind farms with a total capacity of 1 gigawatt.

              Green bonds could allow Ukraine to raise $73 billion in the 2020s, Andriy Frolov, deputy head of the Energy Efficiency Reform Office, told reporters Thursday, citing an International Finance Company estimate. Accompanied by Jean-Erik de Zagon, European Investment Bank representation for Ukraine, Frolov said draft regulations under review by the Cabinet of Ministers envisage launching Ukraine green bonds as early as next year.

              The Rich and Powerful Cash In From Ukraines Green Energy Gold Rush

              headlines a recent report by Alisa Yurchenko for the partly USAID-funded Organized Crime and Corruption Reporting Project. Noting that Ukraines green tariffs are to expire at the end of this year, Yurchenko writes that companies are scrambling to commission projects by late fall. By far the biggest beneficiary of Ukraines green tariffs is still Rinat Akhmetov, she writes. His DTEK holding company plans to increase renewable energy generation from 210 megawatts at the beginning of this year to as many as 1,000 megawatts by years end.

              By the end of this year, Norways Scatec Solar expects to see its total Ukraine investment hit 250-300million and its portfolio of completed projects to hit 400 MW, Scatec Solar CEO Raymond Carlsen tells Energy Reform. Counting projects in the pipeline, Scatec hopes to hit 500 MW next year. We would like to participate in auctions in Ukraine, expected in 2020, he says.

              In Scatecs biggest project, Power China Guizhou Engineering Co. is building a 124 million project, 148 MW solar plant in Prohresivka, Mykolaiv. With Power China covering 65% of the project capital costs, the plant is to be launched in the first half of next year.

              SkyUp starts flights tomorrow from Kharkiv to Paris. After flights from Kharkiv to Rome and Milan on Ernest Airlines and to Dortmund and Vienna on Wizz Air, the Paris flight is part of a new western orientation of an airport built in the mid-1920s to connect the capital of the Ukrainian SSR with Moscow and Leningrad. Today, the airports busiest flight is LOT Polish to Warsaw. Next Monday, Ryanair inaugurates service from Kharkiv with a flight to Krakow. In October, it adds Poznan and Vilnius. In August, Wizz Air adds Krakow, its fourth Polish destination. In May, international traffic from Kharkiv increased by 34% y-o-y, to 95,100 passengers.
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                Reflecting confidence in Ukraines new president Zelenskiy, Finance Ministry officials are on a European roadshow this week, seeking to place at least 500 million in 7-year Eurobonds. Investor meetings are taking place in London, Milan, Frankfurt, and Munich. BNP Paribas and Goldman Sachs are the joint lead managers and bookrunners. A global investor call will take place at 14:15 Ukraine time today.
                Last October, Ukraine placed $750 million in 5-year Eurobonds with a yield of 9%, and $1.25 billion in 10-year Eurobonds with a yield of 9.75%. Ukraine is rated B- by S&P and by Fitch. The roadshow takes place as the benchmark 10-year US Treasury note trades around 2.1%.
                Concorde Capital's Alexander Paraschiy writes: The timing of the new Eurobond placement looks good for Ukraine, given that its seven-year, USD-denominated Eurobond is priced today at its 12-month high (yielding slightly below 8%)...there is a solid chance for Ukraine to place the new issue at about 7% or below.
                Timothy Ash writes from London: Ukrainian Eurobonds have been on a roll over the past month as investors get increasingly comfortable with a Zelenskiy presidency - rallying around 100 bps.
                Depending on the success of the Finance Ministry this week in the Eurobond market, Andriy Kobolyev, CEO of Naftogaz, has said that he would be next to enter the foreign borrowing market, most likely after the July 21 Rada elections.
                Central bank reserves were down 5.5% m-o-m in May to $19.4 billion, enough to cover 3.2 months of imports. The drop, not a surprise, was largely caused by a planned redemption of a $1 billion 2014 Eurobond. Year to date, reserves are down 6.8%, or $1.4 billion, largely due to debt repayments.
                Since the start of the year, the hryvnia has gained 3%. Dragon Capital attributes this to: the $1.3 billion growth in foreign investor holdings of hryvnia bonds, strong farm export prices, and favorably commodities namely high iron ore and low gas prices.
                Saying "Ukraine needs radical changes," the new program of President Zelenskiys party proposes to take police powers away from the State Fiscal Service and to pull the National Police and State Security Service (SBU) away from business infringement. Unveiled Sunday, the the Servant of the People platform calls for ending immunity of Rada members from criminal prosecution, for mandatory confiscation of property from corrupt officials, and for transferring the maximum amount of state services online. It holds out the possibility of a one-time tax and amnesty on unexplained wealth.
                The platform calls for breaking up energy monopolies and for allowing private passenger and freight trains. A legal framework would be created for blockchain currencies. Foreign investors of Ukrainian origin would receive favored treatment. Illegal logging would be a criminal offense.
                The program calls for the harshest punishment for corruption and theft in the Armed Forces and Defense Ministry, decentralizing and de-monopolizing defense procurements, and spending on defense no less than 5% of GDP. In a key step to opening the black box of defense spending, Aivaras Abromaviius, a reformist who was Economy Minister from 2014-2016, is expected to be named director general of UkrOboronProm, the state-controlled defense industry conglomerate.
                In the latest opinion poll prior to the July 21 elections, 48.5% of decided voters favor Zelenskiys Servant of the People party. The Russia-friendly Opposition Platform comes in second with 12% of vote preferences in the poll released Monday by the Kyiv International Institute of Sociology. Former president Petro Poroshenkos European Solidarity ties with former Prime Minister Yulia Tymoshenko Batkivshchyna party, winning 8%. Rock star Svyatoslav Vakarchuk comes in fifth, with 6%. Last week, 48.2% of respondents to a poll by the Rating Sociological Group supported Zelenskiys party.
                Concorde Capitals Zenon Zawada writes: Zelensky has made all the right moves so far as president, which is evident by not only his popularity, but that of his party. Its entirely realistic that Zelensky and his party will form the parliamentary majority.
                President Vladimir Zelensky introduced Monday urgent draft laws to postpone for one year to July 2020 the launch of an electricity market and to retain the green tariff for household solar plants. The draft laws were announced by Andriy Gerus, te presidents representative to the Cabinet of Minister. The former head of an NGO, the Association of Energy Consumers and Utilities, Gerus criticized the planned July 1 market liberalization as poorly thought out and supportive of DTEK, the energy monopolist. On Friday, the National Electricity and Utility Regulatory Commission estimated that inefficiencies in the new market would cost companies and consumers an extra $1.4 billion a year.
                Alexander Paraschiy wrote before the government moved to postpone the market launch: DTEK's key fear is that if the market launch is postponed, the risk emerges that it wont happen at all....[But] seeing such postponement as neutral for DTEK Energy, we continue to treat its Eurobonds as among most attractive in Ukrainian fixed income universe.
                Ukraine can now export to Qatar chicken, eggs, beef, milk, fish and other food products, according to Ukraines state service for food safety and consumer protection. While Qatar has only 2.6 million residents, it has virtually no agriculture and its $184 billion GDP is one third larger than Ukraines.
                The EBRD is arranging a 116 million syndicated loan to Kronospans Ukraine unit to build an oriented strand board plant and 45 MW biomass boiler energy plant in Novovolynsk, near the Polish border. Based in Austria, Kronospan is the worlds largest producer of wooden building boards. Austrian banks Raiffeisen Bank International AG and Raiffeisenlandesbank Obersterreich will loan 50 million of the total.
                Kyiv has the fifth most congested streets in Europe, ranking close behind Moscow, Istanbul, Bucharest and Saint Petersburg. According to the TomTom Traffic Index, Kyiv drivers spend an extra 46% time stuck in traffic. By comparison, the figure in Moscow is 56% and in St. Petersburg it is 47%. While traffic congestion reflects economic growth, it also reflects the inability of city officials to take steps to speed traffic, to reduce bottlenecks and to promote mass transit.
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                • UKRAINE BUSINESS NEWS
                  Train Passenger Traffic to EU Up 13X...Germanys Flixbus Goes Big Into Ukraine...FX Trust Test: 6-Year Hryvnia Bond Sells Out...EU Wants to Cut Ukraine Poultry Exports in Half...Russia Tries to Shoot Down India-Ukraine Air Deal
                  Thanks to visa-free travel with the EU, train passenger traffic between Ukraine and the EU has grown 13-fold in two years. In 2016, before visa-free travel to the EU, Ukrzaliznytsia carried 62,000 passengers between Ukraine and the EU. In 2018, the first full year of visa-free travel, the state railroad carried 821,000 passengers. Today, 16 trains ply the EU market, traveling to eight EU nations -- Latvia, Lithuania, Hungary, Austria, Romania, Poland, Slovakia, Bulgaria. Shortly, UZ plans to add dedicated trains to two more national capitals: Kyiv-Berlin and MukachevoPrague.
                  Since visa-free travel to the EU started on June 11, 2017, UZ carried 980,000 passengers to the EU. But during the same two years, it carried 615,000 passengers back. It is unclear what happened to the missing 365,000 Ukrainians the population of a Vinnytsia. Presumably, most stayed. Others may have earned enough money to fly home.
                  In the first two years of visa-free Ukrainians made 42.6 million trips to the EU, reports the Interior Ministry. Nearly 3 million Ukrainians traveled without visas, using only their biometric passports. In the second year of visa-free, 2.35 million Ukrainians traveled on biometric passports -- 4.2 times the 560,000 who used the new passports for travel in the first year. Land crossing volumes were: Poland -1 million; Hungary 350,000; Romania 245,000; and Slovakia - 226,000. In addition, 1 million Ukrainians flew to the EU, visa-free, using only biometric passports.
                  Flixbus, Germanys largest intercity bus company, is aggressively expanding its Ukraine routes. On Tuesday, the Munich-based operator announced EU routes from nine cities: Kyiv, Lviv, Kharkiv, Dnipro, Odesa, Chernivtsi, Ivano-Frankivsk, Vinnytsia, and Ternopil. Partnering with Euroclub, a Ukrainian bus company, Flixbus offers low prices: Kyiv-Krakow - 21; Kyiv Prague - 44; and Kyiv-Hanover - 72. Michael Lehmann, Flixbus CEO for Poland and Ukraine told reporters in Kyiv that all 24 buses serving Ukraine are to have wifi, electrical charging sockets, on board entertainment systems, clean toilets, an app to track the bus location, and, for safety, two drivers at night.
                  If Germany opens its labor market next year as planned to skilled non-EU workers, one-quarter of all Ukrainians working in Poland could migrate west to Germany by 2023, according to an employee poll by the National Bank of Poland. Ukrainian labor -- about 800,000 workers -- has increased Polands GNP growth by about one percentage point for each of the last five years, Jakub Growiec, a central bank analyst, tells Business Insider Polska.
                  A regular Kyiv-Leipzig container train is to start in coming months,Ukrzaliznytsia CEO Yevhen Kravtsov says after talks in Munich with IPC Business UG. Running 1,500 km from Kyiv to the industrial city in eastern Germany, the train will benefit from Ukraines double-digit growth in container traffic. Next month, UZ launches a container train between Odesa and Chisinau, capital of landlocked Moldova. Also next month, the Chinese Association of CCTA and Chengdu International Railway Service Co., Ltd. plan to restart the Trans-Caspian International Transport Route, running a container train from China to Poland, through Ukraine.
                  The Finance Ministrys 4-day, 4-city roadshow for a new 7-year, Euro-denominated Eurobond is getting good reviews even before bids are made for what could be a 500 million placement. ICU writes: We expect the pricing will be set close to 6.5%... This EUR-denominated placement looks like a good idea, as it will widen the investor base. Currently, EUR accounts for just 9.2% of the total debt portfolio of Ukraine, versus 42.4% of USD-denominated debt.
                  With the hryvnia exchange rate stable and interest rates expected to drop, the Finance Ministry debuted Tuesday the longest bond of its portfolio a 6-year hryvnia note. In the weekly auction, these long bonds placed for a yield of 15.85%. Reflecting strong demand, $128 million in equivalent were sold, accounting for 51.5% of the total value sold.
                  Dragon Capital writes the long bond is apparently targeted at non-residents betting on monetary easing.
                  The EU and Ukraine have agreed to a poultry accord that would essentially cut Ukraines poultry exports in half, to 70,000 tons, Deutsche Welle reports in a story headlined How Urainian poultry becomes Europes Produce. Ukraines EU quota this year is 18,400 tons for chilled poultry and 20,000 tons for frozen chicken. However last year, Ukraine exported 123,000 tons, taking advantage of a EU law allowing unlimited exports of semi-processed chickens. Under this exemption, MHP, Ukraines largest poultry producer, exported chickens for final processing at its plants in Slovakia and the Netherlands.
                  Pending parliamentary approval in Brussels and in Kyiv, the deal comes after news stories in Austria charged MHP with using tricks to exploit legal loopholes.Hardly a victim of Ukraines poultry giant, the EU exports 180,000 tons of poultry to Ukraine more than double its proposed import level. Ukraine is the third largest exporter of poultry to the EU. Thailand and Brazil supply more than twice as much, Deutsche Welle reports.
                  Determined to become Europes largest poultry producer, MHP is investing $420 million over five years to increase its poultry production by 19%, to 855,000 tons in 2023. To feed the chickens, company plans to increase its land under cultivation by 35%, to half a million hectares. Forecasting stagnation or shrinkage in EU market share, the company plans to develop the Middle East and North Africa, increasing that segment from 34% of sales last year to 43% by the end of 2020.
                  Alexander Paraschiy wrote before the government moved to postpone the market launch: DTEK's key fear is that if the market launch is postponed, the risk emerges that it wont happen at all....[But] seeing such postponement as neutral for DTEK Energy, we continue to treat its Eurobonds as among most attractive in Ukrainian fixed income universe.
                  Ukraine can now export to Qatar chicken, eggs, beef, milk, fish and other food products, according to Ukraines state service for food safety and consumer protection. While Qatar has only 2.6 million residents, it has virtually no agriculture and its $184 billion GDP is one third larger than Ukraines.
                  As India and Ukraine negotiate renewing a big contract to modernize 20 Kyiv-made An-32 military cargo turboprops, Russia is reverting to a Cold War tactic using a third country journalist to smear an adversary in Indias press. With the implosion of society and economy in Ukraine, following the US-sponsored coup, things only got worse for India, Rakesh Krishnan, a New Zealand-based journalist, writes in Indias Business Today about a $400 million An-32 maintenance contract India signed in 2011 with Ukraine.
                  Ukraine modernized only 45 planes out of a fleet of 105 before the 2014 outbreak of war with Russia-controlled separatists cut work short. Recently, a Ukranian delegation from SpetsTechnoExport visited the headquarters of the Indian Air Force to negotiate upgrading the remaining 60 An-32s by the end of next year. But, Krishnan focused on last weeks disappearance of an Indian Air Force An-32 on a flight to a Himalayan airstrip near China, writing of the sheer incompetence of the Ukrainians in implementing the modernization contract.
                  Referring to a separate naval engine deal, he writes: Ukraine has also attempted to play spoilsport in another major defence deal involving Russia. In conclusion, he warns Indian business readers: Pakistan and Ukraine have been carrying on a chummy defence trade...Considering the chaotic state of Ukraine's economy and its close ties with a leading exporter of terror, India should review its defence ties with Kiev.
                  The missing An-32 had not been serviced or certified for flight by Antonov technicians from Kyiv, writes Rada member Dmytro Tymchuk, a coordinator of Information Resistance, an NGO dedicated to exposing Russian disinformation. He writes on Facebook: "It is not surprising that Russia is interested in discrediting Ukraine since there is a tendency for India to gradually abandon Russian weapons, components, and services in favor of the American, European, and Ukrainian producers."
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                  • UKRAINE BUSINESS NEWS
                    Poland agrees to expand purchases of US liquefied natural gas by one third, Presidents Donald Trump and Andrzej Duda announced Wednesday at the White House. Trump said: Over the past years, Poland has contracted with American firms for a total of about $25 billion to purchase more than 6 billion cubic meters of US liquefied gas. Today our countries have signed another contract for the supply of an additional 2 billion cubic meters worth about $8 billion. Poland plans to stop importing gas from Russia after 2022.
                    Foreigners accounted for most buyers of Ukraines debut issue of $128 million worth 6-year hryvnia bonds, Finance Minister Oksana Markarova writes on Facebook. The sale is part of a strategy stretch out the maturity rates of the government bonds and to lower the interest rates. The 6-year bonds placed at the annual rate of 15.85%.
                    Interfax-Ukraine writes: The success of the auctions on June 11 is also explained by the Ministry of Finance by joining the network of the international depositary of Clearstream securities, which has opened up more opportunities to attract global investors in T-bills in national currency while extending the terms of their circulation.
                    Concorde Capitals Evgeniya Akhtyrko hails the sale of 6-year bonds as a positive achievement, writing: It points to increased confidence of investors in Ukraines debt market, as well as improved expectations regarding the stability of Ukraines national currency.
                    President Zelenskyy appointed former economy minister Aivaras Abromaviius
                    on Wednesday to the supervisory board of Ukroboronprom, the state defense conglomerate. In April 2016, Abromaviius left the economy ministry, charging corruption in the Poroshenko administration. Since then he has chaired the Ukrainian Corporate Governance Academy, a Kyiv-based non-profit dedicated to improving Ukrainian state company management.
                    Ukroboronprom is a company with a huge potential yet it has drowned in major corruption scandals over the past few years, Abromavicius told the Kyiv Post after his appointment. We need to start the financial audit that has been artificially stalled since 2017, initiate deep and comprehensive personnel changes, assist law enforcement agencies in the investigation of the past crimes. Ten of the conglomerates 100 companies are slated for privatization.
                    PrivatBank lost $303 million of deposits after a Kyiv court ruled in April that nationalization of the countrys largest lender was illegal, the banks finance chief tells Reuters. Noting depositors got a bit nervous, Anna Samarina, PrivatBanks chief financial officer, said in an interview: As of today, we managed to recover part of that, but we are not back to previous levels. As legal fights continue with the former owner, Igor Kolomoisky, she said: Up to 10% of the banks operating costs are now dedicated to legal costs. Although Kolomoisky was Zelenskyys main media backer in the presidential campaign, Samarina said: There has been no interference from the new presidential team in the operations of PrivatBank.
                    Noting the initial withdrawals amounted to 5% of deposits, Timothy Ash writes:This is a huge issue for Ukraine. Let's hope the courts rule the most sensible course of action, and do not jeopardize Ukraine's hard-won macro stability.
                    A decade ago, a Kolomoisky-controlled company, Optima Ventures, became the largest real estate owner in Cleveland, owning 2.8 million square feet of office and retail, writes in an article How Ukrainian Oligarchs Secretly Became the Largest Real Estate Owners in Downtown Cleveland. In recent years, Optima has been selling off its Cleveland properties, most of which have fallen into disrepair and suffer from high vacancy rates, reports the story, based on local reporting and on the 104-page legal complaint filed last month in Delaware by PrivatBanks current management.
                    Chaim Shochet, a Miami-based manager of Optima, responded to Cleveland.coms questions about the Delaware suit, saying by email: The allegations in this lawsuit part of an orchestrated political attack by a Ukrainian bank against investors in our thriving businesses are false, defamatory and utterly without merit. We intend not only to contest but to disprove these reckless allegations, and to demonstrate that they are part of a smear campaign driven by a Ukrainian political agenda that we have nothing to do with.
                    In the latest suprise decision by a Kyiv court, a district judge suspended on Wednesday the operating license of SkyUp, Ukraines one-year-old discount airline. With Ukraines peak summer travel season starting this week, the airline appealed. The Infrastructure Ministry found a legal mechanism to keep the airline operating and making all its flights. In its first year of operation, the airline carried 870,000 passengers on 5,203 flights, largely to southern vacation destinations. Last week, SkyUp received its eighth Boeing passenger jet.
                    The court decision was in response to a complaint by Oksana Pasenko, who charged that the airline is unsafe and suffers from flight delays. The airline counters that she never bought a ticket with SkyUp. Interfax-Ukraine cites an Infrastructure ministry official saying Pasenko has more than 30 administrative offenses, a significant part of which is related to alcohol.
                    Corporate raiding is behind the court decision in an area which is the jurisdiction of the State Aviation Administration, Infrastructure Minister Volodymyr Omelyan writes on Facebook. What is happening now is a clear attempt to intervene in the created mechanism of free's again an attempt to return to the aviation monopoly in the sky, writes Omelyan. He changed his Facebook home page photo to show a SkyUp Boeing landing at Boryspil with the warning: They want to end the freedom to fly.
                    With 31 regular and 15 charter routes, SkyUp now has direct international flights from Kyiv Boryspil and 10 regional airports. The two significant airports that do not have SkyUp flights are Dnipro and Ivano-Frankivsk, both owned by Kolomoisky. SkyUps strategy clashes with the spoke and Boryspil hub strategy of Ukraine International Airlines, also owned by Kolomoisky. Last year, UIA lost $100 million.
                    In the two years of Ukraines visa-free regime with the EU, Ukraines international air routes have increased by 48%, to 129, Ivanna Klympush-Tsintsadze, vice prime minister for European Integration, writes on Facebook. The number of foreign air carriers has nearly doubled, reaching 39 today. The number of discount airlines has increased from eight in 2017 to 13 today. Referring to the 28-nation European Union, she writes: Six low-cost airlines carry passengers and cargo on 125 routes to 24 EU countries.
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                      Reflecting foreign investor confidence in a future Zelenskyy government, investors oversubscribed Ukraine first Eurobond since October by a factor of six, bidding the final interest rate below the range set by the Finance Ministry. After drawing 6 billion in bids, the Finance Ministry placed the 7-year 1 billion bond at 6.75%. Todays strategic transaction is demonstrative of the continued investor support for our country, Finance Minister Oksana Markarov said Thursday after the placement, which capped a four day, four EU city roadshow by her team. BNP Paribas and Goldman Sachs International acted as joint lead managers on the transaction.
                      Separately, foreign investment in Ukraine government hryvnia bonds has increased nearly 8-fold since the start of the year. With Tuesdays weekly auction, foreign holdings of the T-bills increased by 13% to 48.7 billion UAH, the equivalent of $1.84 billion. Foreigners bought more than half of a new six-year bond offering this week. These bonds, the longest in the Ukraine government portfolio, placed at 15.85% per annum.
                      The Zelenskiy administration wants to negotiate a 3-4 year program with the IMF, to lay the foundations for Ukraine to become the East European Tiger, Olesiy Honcharuk, deputy head of presidential administration, says in an interview with NV.Business. In it, we will try to lay structural reforms, which over the years will lead the country to a qualitatively new level, he said.
                      Honcharuk rejected as exotic a recent debt default call by Igor Kolomoisky, Zelenskyys main media backer. Such statements cost money to me as a citizen, Honcharuk said. Every such statement is perceived by investors as an increase in risks. And they increase the cost of resources for Ukraine. This means that each time when such statements appear in the press, we become a little poorer. And my task at the Presidential Administration is that Ukrainians should not become poorer.
                      In Washington, IMF spokesman Gerry Rice responded to the interview, saying: We expect the completion of the elections before moving forward." Last December, the IMF and Ukraine agreed to a 14-month, $3.9 billion standby program designed to get Ukraine through 2019, a year of presidential and parliamentary elections.
                      Dragon Capital writes of Zelenskyys appointment of former economy minister Aivaras Abromaviius as member of the supervisory board of UkrOboronProm, the corruption-riddled defense industry conglomerate: Although Abromaviius new position has no direct relevance for markets, his appointment should be taken positively by investors as a sign of Zelensky continuing to attract market-friendly people to his team and, considering Ukroboronproms track record of opaqueness and scandal, demonstrating his resolve to fight high-level corruption at state-owned enterprises.
                      Pushing Russia-EU-Ukraine gas brinkmanship three months down the road, Russia proposes holding the next 3-way meeting for renewing the Ukraine gas contract in late September. Putting a positive spin on the delay, Maro efovi, vice-president of the European Commission for Energy, said after meetings in Moscow on Thursday: We will continue our constructive negotiations by telephone in the summer and when we meet in September. Russias Energy Minister Alexander Novak said the delay is needed for Ukraine to have parliamentary elections and to form a new government.
                      With Gazproms 10-year gas transit contract expiring Jan. 1, efovi expressed confidence that a solution will be found for the supply of gas through Ukraine to the European Union. He urged that Ukraine use the time to pass EU-standard energy laws and for Naftogaz to unbundle gas transit from gas production.
                      Watching from the sidelines in Kyiv, Ukraines chief negotiator, Naftogaz Executive Director Yuriy Vitrenko, expressed regret at the three-month delay for starting face to face talks. The reason is obvious after Ukraine and the EU had taken a consolidated position that transit through Ukraine should be carried out according to fair European rules, these negotiations became uninteresting for the Russian Federation, he wrote on Facebook. It seems that Russia is waiting for negotiators who will hand over the interests of Ukraine rather than agree on civilized and fair rules for all parties.
                      Raising pressure on Russia to do a deal, President Trump said in Washington that he is considering considering sanctions over Russia's Nord Stream 2 natural gas pipeline. The Russia-Germany Baltic pipeline really makes Germany a hostage of Russia if things ever happen that were bad, the president said at a press appearance with visiting Polish President Andrzej Duda. Were protecting Germany from Russia and Russia is getting billions and billions of dollars from Germany. Bills sanctioning European companies building the $9 billion pipeline are under consideration in the US House and Senate.
                      On Monday, Zelenskyy flies to visit Paris where he meets with the President Macron. On Tuesday, he flied to Berlin where he meets with Chancellor Merkel. President Trump has invited Ukraines new president to visit Washington.
                      Low incomes and insecurity about Ukraines future are the prime drivers for emigration, according to the Barometer of Happiness in Ukraine, a new internet survey conducted by the European Business Association. Of the 1,118 respondents, largely Kyiv office workers, the EBA said: 51% consider their income level insufficient for a normal life...72% of respondents are not satisfied with the state of security in the country and feel insecure about their own future.
                      With an eye to the labor migrant market, Wizz Air plans to double flight frequencies from Lviv to Bratislava, Wroclaw, Gdansk, Berlin and Dortmund. Starting Oct. 20, most of these flights will be five times a week. Similarly, Wizz Air plans to expand in October its flight frequency from Kyiv Sikorsky to Tallinn.
                      LOT Polish plans to start service next year from d to Kyiv Boryspil, reports news site Rynek lotniczy, or Aviation Market. In two weeks, Wizz Air plans to start flights from Kyiv Sikorsky to Lublin. With these two new flights, there will be airlfights from Ukraine to 10 of Polands 12 largest airports.
                      River cargo on the Dnipro is up 68% compared to the first five months of last year. Through this May, barges have moved 3.2 million tons. The increase is attributed to an early break up of ice on the river and last years bumper 70-million ton grain harvest straining truck and train capacities to the Black Sea ports.
                      Nibulon, the main grain transporter on the river, is building four new river barges this summer at its Mykolaiv shipyard, the company reports. The four B1500 class vessels are to be launched by the end of August.
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                      • UKRAINE BUSINESS NEWS

                        Construction starts doubled during the first quarter, compared to the same January-March period last year, reports the State Statistics Service. Nationwide, construction starts hit 2.7 million square meters, overwhelmingly residential apartment buildings. Growth champions are these cities: Kyiv up 3.3-fold to 1.1 million square meters; Lviv up 3.2-fold to 378,000 square meters; Odesa up 1.7-fold to 376,400 square meters; and Kharkiv up 1.6-fold to 231.300 square meters.

                        President Zelenskyys party aims to create a private farmland market within one year, Dmitriy Razumkov, head of the presidents Servant of the People Party, tells news site. The land market needs to be open -- the moratorium is imposed from year to year because it is profitable, he said referring to a temporary land sale ban that was imposed in 2001. To create a private land market, he said, it is necessary: to win a working majority in the July 21 Rada elections; to draw up law, and to prepare public opinion.

                        Ukraines successful 1 billion Eurobond placement last week opens a window for the potential placement of quasi-sovereign bonds, with the straightforward candidates for the new placements being Naftogaz (NAFTO) and Ukrainian Railway (RAILUA), writes Concorde Capitals Alexander Paraschiy. He adds: The deal is positive for the budgets and state debts short-term sustainability.

                        The retail vacancy rate on Kyivs Khreschatyk Street fell in May to 6%, reports Colliers International. The highest rent has not changed in two years: $83 per square meter. The mix of retail on Kyivs premier street is clothing 31%; cafes and restaurants 27%; and others -- banks, pharmacies, jewelry stores, children stores, food, and souvenir stores -- 36%.

                        Frances Air Liquide, the world's largest supplier of industrial gases, signed a $25 million deal with Metinvest Holding on Saturday to build an air separation plant at the Mariupol Metallurgical Combine. The plant is the first phase in a $78 million project that is to create 1,000 jobs. This is a very important event for Ukraine as a whole, said President Zelenskyy, who attended the signing ceremony in the Donetsk region port with French ambassador Isabelle Dumont. It will strengthen the faith of the western market in the stability of the country.

                        As investment returns to front line areas, Epicenter K opened on Saturday a two-story, 17,700 square meter shopping center in Kramatorsk, Donetsk region. Despite the fact that the distance to the so-called delimitation line is only 60-70 km, we decided to invest in the construction of a new shopping center in the Donetsk region and thus support the development of the eastern region, said Peter Mikhailishin, general director of the company, which has 52 shopping centers across Ukraine. Today, it is the largest shopping center in the frontline zone. The center offers: Garden and Kitchen Garden, Wood Products, Sanitary Engineering, a caf, an entertainment center, and parking for 232 cars.

                        Holtec International, a New Jersey-based producer of small nuclear reactors, signed a partnership last week with Energoatom and the State Scientific and Technical Center for Nuclear and Radiation Safety to build in Ukraine six SMR-160 small modular reactors for deployment in 2026 at western Ukraines Rivne Nuclear Power Plant. Using low-enriched uranium fuel, the reactor's core and nuclear steam supply system components would be underground. The design includes a passive cooling system that would operate indefinitely after shutdown. In Chernobyl and Fukushima, Japan, electric pump systems failed, leading to nuclear fires.

                        HBOs miniseries Chernobyl is to boost Kyiv tourism this summer, drawing foreigners for 1-day, $100 tours of the site of the worlds worst nuclear disaster. The 5-part series ended June 3 at the top of IMDbs list of top-rated television shows. This year, Chernobyl tour operators expect numbers to top 100,000, up from 72,000 last year. With foreigners accounting for 80% of visitors, leading nationalities are British, German, Polish, and American, Vitaly Petruk, head of the Exclusion Zone Management State Agency, tells Interfax-Ukraine.

                        Travel site Kayak found that flight search demand to Kyiv increased 18% since the show first aired last month. Travel app Hopper found an 8% increase in Kyiv searches. Chernobyl is a 2-hour, 140 km drive north of Kyiv. The HBO series sparked Chernobyl stories in The Atlantic, The New Yorker, The Daily Beast, Marie Claire, CNBC, CNN, Bloomberg, Reuters and Buzzfeed.

                        For Kyivs five licensed Chernobyl tour operators, there is a need to train more multi-lingual tour operators well versed in nuclear science and late Soviet history, Anna Romanova, head of the Rada subcommittee on tourism, resorts and recreation, tells Interfax-Ukraine. Yaroslav Emelianenko, director of the Chernobyl Tour Operators Association, says: We are urgently preparing new guides, preparing new locations. Predicting visitors will double this year to 150,000, he says: We are also building new routes, including water and kayaks, and to other parts of the Chernobyl zone, which are now closed.

                        A binational Belarussian-Ukrainian team is surveying the navigable depths of the Pripyat River with the goal of running tourist boats and cargo barges through the exclusion zone, between Mazyr, Belarus and Kyiv. The State Exclusion Zone Management Agency is allocating $3 million this year to rebuild two road bridges in the zone. Petruk, the agency head, tells Ukrinform that solar stations will be built on Chernobyls already degraded industrial land, not in the ecological biosphere reserve, which accounts for 85% of the zone.

                        Nature tourism is a future draw for what now are the largest nature reserves of Belarus and Ukraine. Closed to human habitation for three decades, the zone now is inhabited by brown bears, bisons, wolves, lynxes, Przewalski horses, and more than 200 bird species, Germn Orizaola, a researcher from the Universidad de Oviedo, writes an article for The Conservation, Chernobyl has become a refuge for wildlife 33 years after the nuclear accident. [This] suggests that the pressures generated by human activities would be more negative for wildlife in the medium-term than a nuclear accident a quite revealing vision of the human impact on the natural environment.

                        With travel to Italy growing, Ernest Airlines plans to triple its investments in Ukraine, to 100 million, and to base two jets next year in Ukraine, probably in Lviv and at Kyiv Sikorsky. With 13 Ukraine routes -- from Kyiv, Lviv, Kharkiv, and Odesa the Milan-based discount airline expects to more than double its Ukraine air traffic, to 500,000 this year, reports avianews. From Kyiv, Ernest flies to five Italian cities: Bergamo, Bologna, Genoa, Milan-Malpensa, Naples, and Rome-Fiumicino.

                        The price of success for SkyUp, Ukraines new discount airline, is a campaign of harassment. Without naming which air rival might be orchestrating the campaign, Alexander Alba, a shareholder and founder of the one-year-old airline, writes on Facebook: Today, our company feels unprecedented pressure: dirty information attacks (for example, a fake website with reviews, Bot attacks, a false video message by a journalist from one of the main channels), six simultaneous checks in a group of companies, unfounded [Rada] deputy speeches and the already legendary decision of the Baryshevsky court. After that decision suspended its license, SkyUp immediately appealed. It is operating normally.
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