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Ukrainian company says gas production priority due to lower royalty

Ukrainian company says gas production priority due to lower royalty

The public joint-stock company Ukrnafta will develop gas production as a top priority direction, as oil royalty is set at a higher level, the company's press service has reported.

"Taking into account the cash cost, it is more beneficial to produce gas than oil for us. Finally we plan to produce more gas and spend fewer efforts on oil production. With the oil price decline to the minimum figures seen at the beginning of this year, development of our fields is getting less and less attractive," the press service quoted Ukrnafta head Mark Rollins as saying.

Ukrnafta recalled that the oil royalty is set at 45 per cent, while gas royalty is 29 per cent.

As reported, Ukrnafta has 1,941 oil wells and 177 gas wells. It owns 537 filling stations across Ukraine.

Naftohaz Ukrayiny holds 50 per cent plus one share in Ukrnafta, a group of companies affiliated with Dnipro-based PrivatBank's shareholders owns about 42 per cent of the company's shares.