Due to suspension of special permits of private gas production companies Ukrgazvydobutok and Prom-Energo Product of Smart Energy Group for hydrocarbons production at Ostroverkhivske and Vasyschivske fields, the State and local budgets have already lost almost 110 million UAH, and the energy system – 12.4 million m³ of gas. Unless operation of companies is resumed in the near future, by the end of 2023 alone the State will have lost another 1.3 billion UAH of taxes and 135 million m³ of gas.
Thus, on April 12 and May 4, 2023, Ukrainian Geological Survey (State Geologic and Subsoil Survey of Ukraine) issued orders to suspend validity of special permits for the companies of Smart Energy Group operating in Kharkiv province. As a result, gas-producing companies were immediately forced to completely shut down their activities. Since then, the State fails to receive almost 450 thousand m³ of gas every day, and the State and local budgets - almost UAH 5.5 million in taxes.
The grounds for suspension of special permits were illegal actions of the Ministry of Justice of Ukraine, which, in violation of international and Ukrainian legislation, forcibly removed new beneficial owners of companies from the registers and returned the former beneficiary V.V. Novynskyi.
Shutting down existing wells is highly likely to have negative consequences in the future, as the wells will not be able to operate at their previous performance level. Moreover, there is a big risk of not resuming the operation of some wells at all and thereby losing the potential of producing part of the already discovered gas and condensate reserves.
"For a country in a state of war, it is extremely important to fill the budget, because these expenses also go to ensure our defence capability. Therefore, it is not clear to us why the State bodies do not consider all risks and losses that the State directly incurred because of suspension of special permits and termination of activities of an operating business," said Acting Director of Smart Energy Group, Oleksiy Zayets.
In addition, a shutdown of two operating companies in a region that is under constant enemy fire may lead to increase of social tension. After all, after a certain time, 150 people who must support their families in this difficult time may lose their jobs. Also, service companies and local business representatives will lose their orders due to a shutdown of gas producing companies. Also, the companies of Smart Energy Group will not be able to help out local communities and the Armed Forces, which is also extremely important in wartime conditions. For example, Ukrgazvydobutok allocated 19.2 million UAH for such needs in 2022.
It should be noted that in 2022, the companies of Smart Energy Group in Kharkiv region, after a brief shutdown for security reasons, resumed their work to continue gas production necessary for the country and fill budgets.
Also, Smart Holding has previously stated that it denies any accusations against the Group's businesses of destructive activities or accusations of alleged financing of terrorism and is ready to oppose slander and arbitrariness by all legal means.
Smart Energy is a part of investment group Smart Holding and is in charge of implementing exploration projects, commercial development of the hydrocarbon deposits. It is ranked in top 5 biggest private gas producers of Ukraine, producing over 1 mln m3 of gas per day in total at the beginning of Russia's invasion of Ukraine.
Oil & Gas business block of Smart Energy is represented by gas producing Ukrgazvydobutok (Kharkiv region) and Enwell Energy, a listed British company having assets in Poltava (the Representative Office of Regal Petroleum Corporation Limited and Arkona Gas-Energy LLC) and Kharkiv regions (Prom-Energo Produkt).