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Crimea energy firm says better off under Russia
April 22, 2014 / 5:18 PM / 3 years ago

Crimea energy firm says better off under Russia

PARIS (Reuters) - Crimean oil and gas producer Chornomornaftohaz sees hope for the future from its new Russian owners and the possibility of doing business with Asia, after Kiev had failed to pay it anything for well over a year, a senior executive said.

Russia annexed the Crimean peninsula following a referendum last month, and Crimea took ownership of Ukrainian state assets on its territory including the region’s Black Sea natural gas fields and energy company Chornomornaftohaz.

“Crimeans now feel much better than when they were with Ukraine,” Andrey Palyura, leading engineer of the marketing group at Chornomornaftohaz, told Reuters on Tuesday in an interview on the sidelines of an oil and gas conference in Paris.

“In the short term, of course we have some problems. There’s a little bit of a pause, but gas production has not stopped,” he said. Crimea is connected to Ukraine’s gas infrastructure, not Russia‘s, and it no longer has access to Ukraine’s oil refineries to process its small output of oil.

For gas, the plan for this year is to double production to 2 billion cubic meters (bcm) and make Crimea self-sufficient in energy, and for next year to increase output again to 3 bcm.

“This year we will become balanced with gas. We will satisfy 100 percent consumption demand in Crimea,” Palyura said. “One of the top priorities for the next period is to ensure our power independence.”

POTENTIAL

The Black Sea is one of the world’s last remaining territories where deep water exploration for oil and gas is underdeveloped and now possible due to technological advances.

For Ukraine, offshore Crimea had offered the best chance to reduce its dependence on Russian gas. Kiev chose a consortium led by Exxon Mobil and Royal Dutch Shell to develop its Skifska gas field in August 2012.

Exxon has since said the talks are on hold, and Shell said it had broken off negotiations.

The United States put Chornomornaftohaz on its sanctions list on April 11, effectively making it off-limits to Russia’s state-controlled Gazprom.

Palyura said the sanctions were counter-productive, but he believed Asian countries would still be open to working with the Crimean company in such matters as investment and sales.

“We’ll find a way; we’ll sell to China,” he said.

Anything would be an improvement, he said, after the government in Kiev had paid nothing to Chornomornaftohaz since the summer of 2012.

Palyura, whose mother is Russian and father Ukrainian, said he is also better off personally, although getting to a conference in Paris had appeared daunting as the 42-year old feared he would not get a visa.

“We hope that our life in Russia will be better. Already, my parents who are pensioners received 50 percent more,” he said.

That a company, which was Russian until Crimea was given to Ukraine in 1954, should become Russian again had been a dream, he said. “We wanted it, but it seemed unbelievable.”

Editing by Jane Baird

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