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Security Services Raid Headquarters of Ukraine’s Largest Gas Company

Ukraine Naftogaz

Ukraine’s security services on Wednesday raided the headquarters of the country’s largest gas company Ukrgazvydobuvannia, as an ownership battle emerges.

Ukrgazvydobuvannia, wholly owned by state-run Naftogaz Ukrainy, is Ukraine's largest gas producer, accounting for about 75 percent of the overall gas production in the country. It also operates the Shebelynka gas refinery. The company confirmed searches today at its headquarters, but provided no further details.

In February, the Prosecutor General’s Office searched four branches of the company during which documents concerning the company’s relation with its equipment suppliers in 2014-2015 were confiscated.

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The renewed searches come as Ukraine’s energy community discusses the possibility of removing Ukrgazvydobuvannia from ownership of the national joint-stock company Naftogaz Ukrainy due to risk linked to the litigation between Naftogaz and Russia's Gazprom in the Arbitration Institute of the Stockholm Chamber of Commerce.

In March, Gazprom filed adjusted claims with the Arbitration Institute of the Stockholm Chamber of Commerce against Ukraine's Naftogaz relating to a gas contract dated January 19, 2009. The overall claims, including a new claim for $2.549 billion on take or pay terms in Q3 2015, are $31.759 billion. A decision from the court is expected in June.

If the court ruling is not in favor of Naftogaz Ukrainy, the company risks losing some assets due to claims of creditors, Ukraine’s Energy Ministry argued.

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But after months of deliberations, Ukraine’s Energy Community Secretariat has recommended that public joint-stock company Ukrgazvydobuvannia remain with Naftogaz Ukrainy, despite concerns voiced by the Energy Ministry.

"The Secretariat believes that separating Ukrgazvydobuvannia from Naftogaz Ukrainy is a snap decision. It is viable and effective to leave Naftogaz in control over Ukrgazvydobuvannia," Mykhailo Bno-Airiian, director of the Ukrainian Energy and Coal Industry Ministry's Planning and European Integration Department, wrote on his Facebook page.

By Charles Kennedy of Oilprice.com

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