Ukrainian govt asks National Bank to let Ukrgasvydobuvannya transfer $26.7 mln abroad in payment for Chinese equipment
MOSCOW. March 6 (Interfax) - The Ukrainian government has asked the National Bank to allow Ukrgasvydobuvannya transfer $26.740 million abroad in payment for equipment from China's Sichuan Honghua Petroleum Equipment Co.
"The Ukrainian government asks the National Bank to allow transborder foreign-currency transfers by Ukrgasvydobuvannya in payment for the energy equipment supplied in 2019," the application, approved by a government resolution of March 3, 2023, published on the government website, said, as reported by the Ukrainian media.
According to the document, the payment for energy equipment supplied in 2019 under a foreign economic contract dated 22, 2018, is necessary for an urgent upgrade and maintenance of 15 drilling rigs to help restore natural gas extraction.
The transfer will be performed via PJSC Ukrgasbank.
"The aforesaid upgraded drilling rigs are being used in full as an important factor of successful achievement of the strategic objectives of Ukrgasvydobuvannya and increase production for higher energy independence of Ukraine," the government said.
"A failure to pay the debt to Sichuan Honghua Petroleum Equipment Co. would create a real risk of the impossibility of restoring the drilling rigs," it said.
In addition, the entire fleet of new and upgraded drilling rigs requires maintenance, including exclusive spares for the equipment, technical monitoring and warranty service, the government said.
"Therefore, a number of contracts has been concluded with LLC Honghua International Ukraine as the only, exclusive authorized dealer of Sichuan Honghua Petroleum Equipment Co. in Ukraine, to provide maintenance and to supply the required spares," the government said.
The growing debt under the contract dated June 22, 2018, creates problems with the conclusion of new contracts necessary for production, it said.
Meanwhile, Ukrgasvydobuvannya is planning to resume operation of all rigs as soon as possible, as the drilling of new wells will have the most significant, enduring effect for the country's provision with domestic gas, the government said.
"The ignoring of these risks may lead to the halt of three-quarters of the drilling rigs as early as in the second half of 2023, considering that drilling rigs made by Sichuan Honghua Petroleum Equipment Co. may eventually lose serviceability due to the absence of original spares and service by the manufacturer," the government said.
Back on June 22, 2018, Ukrgasvydobuvannya signed a $53.3-million contract with a major Chinese supplier, Sichuan Honghua Petroleum Equipment Co., for the delivery of energy equipment to upgrade 15 drilling rigs supplied in June-August 2019.
The contract allowed for a delay in final settlement by 720 calendar days after finalization of the commissioning of every upgraded rig.
Ukrgasvydobuvannya was due to pay $26.74 million by that schedule.
The upgraded drilling rigs are being used to the fullest extent, which is an important factor of successful achievement of Ukrgasvydobuvannya's strategic goal of increased gas extraction, the application said.