Ukrainian business tycoon Igor Kolomoisky became a major shareholder in Ukraine’s largest non-state hydrocarbon production and exploration operation.
Ukrainian business tycoon Igor Kolomoisky became a major share holder in Ukraine’s largest non state hydrocarbon production and exploration operation in December.
London-based JKX Oil & Gas plc, whose main source of revenue is Poltava Petroleum Company, announced Jan. 17 that Kolomoisky bought a 12.6 percent stake.
Sources said he purchased the shares from JKX’s main shareholder Alexander Zhukov, paying about $157 million for nearly half his approximate 25 percent stake.
Days after the announcement, Kolomoisky’s close partner Gennadiy Bogolyubov announced the duo is planning to sell their 42 percent share in Ukrnafta, Ukraine’s biggest oil-producing enterprise.
In doing so, the businessmen may be trying to shift their stake from Ukraine’s top hydrocarbon producer, a government-owned enterprise with many restrictions, to the second-largest producer, a private company with more possibilities, experts said.
“The investments into privately owned JKX look more atttractive than Ukrnafta,” said Volodymyr Nesterenko, an analyst at Concorde Capital.
“Being majority owned by the state, Ukrnafta suffers more from goverment regulation. It blocks business decisions not approved by the state.”
The deal’s price was not disclosed, but the shares are worth about Hr 794 million, or $157 million.
Kolomoisky became the company’s second-largest shareholder after Zhukov, who agreed to reduce his approximate 25 percent stake but remained the biggest shareholder through Glengary Overseas Ltd.
Kolomoisky, who bought his shares through Ralkon Commercial Ltd., is among numerous Ukrainian tycoons who have indulged in an interntional shopping spree to snap up assets outside Ukraine for top dollar in the past several years.
Ukrnafta presents challenges to private investors because the state fixed its price for natural gas at $53 per 1,000 cubic meters, below production costs and much lower than market rates, including imports, Nesterenko said.
“In fact, Ukrnafta is currently obliged to sell gas only to state-owned (oil and gas holding) Naftogaz at a fixed price,” he said.
Despite their recent statement, Kolomoisky and Bogolyubov are unlikely to sell their stake in Ukrnafta, observers said.
“It looks like they used the statement to pressure the state, trying to force it to either to raise the natural gas price or to decrease the rental fee for oil production,” Nesterenko said.
Ukraine’s biggest business interests have been acquiring foreign assets because of limited expansion potential locally, as well as unstable Ukrainian government policies, Nesterenko said.
Late last year, Bogolyubov bought a controlling stake in Australian miner Consolidated Minerals for $1 billion.
Also on Jan. 17, leading Ukrainian steel producer, Industrial Union of Donbass Corporation, announced it was close to launching a brand new mini steel mill in the United Arab Emirates in cooperation with partners.
The Privat business grouping, based in Dnipropetrovsk, also has significant control of the international ferroalloy market with mines and factories in Ukraine, Russia, Georgia, Romania, Poland and Ghana.
