1. ‘The only positive business case’
  2. Nine-year-old case
  3. Poor prospects ahead

The year 2022 was one of the worst for Ukrainian oligarch Ihor Kolomoiskyi. And 2023 doesn't look good for him either.

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First, the government returned the Dnipro airport, long owned by Mr Kolomoyskyi, under its control, and then took away one of the largest petrol station chains and alienated the oil and gas company Ukrnafta and the Kremenchuk oil refinery.

Now, the businessman stands to lose another of his important assets – Ukrnaftoburinnya, Ukraine’s second largest private oil and gas producers.

Last week, Ukrnaftoburinnya’s shares were re-arrested and again transferred to the asset recovery and management agency (ARMA). The company’s shareholders failed to cancel the court’s decision and are now threatening to sue Ukraine in an international court. explains what the case of Ukrnaftoburinnya is about, who already has their eyes on the company worth USD 500 million, and whether the state will be able to use it effectively.

‘The only positive business case’

Ukrnaftoburinnya has a complicated history. Since Ukraine proclaimed its independence, endless wars have waged over who gets access to the company’s field.

Until 2009, Ukrnaftoburinnya's main shareholder was Mykola Zlochevsky, the former ecology minister. That year, he sold his stake to the so-called Privat Group owned by Mr Kolomoisky and his business partner, Gennadiy Bogolyubov, the two oligarchs concentrating 90 percent of the Ukrnaftoburinnya's shares in their hands.

At a glance, the change of ownership seemed to have benefited the company. In early 2010, the government issued Ukrnaftoburinnya a new licence to develop the Sakhalin gas field, which the company had been trying to obtain for four years. The field’s reserves, about 15 billion cubic metres of natural gas, eventually allowed Ukrnaftoburinnya to become the second private gas producer in the country after Rinat Akhmetov's DTEK Oil&Gas.

However, the deal paved the way for a war for the company between Mr Kolomoisky and Eduard Stavytsky and Andriy Kliuyev – associates of Ukraine’s then-president Viktor Yanukovych, that lasted until November 2014.

Mr Kolomoisky was lucky. After the Revolution of Dignity, former members of Mr Yanukovych’s Party of Regions lost their influence, and his friends – Pavel Fuks, a sanctioned businessman who made his fortune in Moscow, and former MP Vitaliy Khomutynnik – became the key business partners of Privat Group in Ukrnaftoburinnya.

According to Forbes, Privat Group owns 25 percent of Ukrnaftoburinnya, with another 10 percent owned by JKX Ukraine (also owned by Mr Kolomoisky), and the remainder by offshore companies owned by Messrs Fuks and Khomutynnik.

Ukrnaftoburinnya is Mr Kolomoisky's only positive business case in Ukraine, says Andriy Zakrevskyi, founder of EnergoDzherela, a consultancy.

According to YouControl, the company made UAH 3.8 billion in profit in 2022, with the revenue at UAH 9.7 billion. In April 2023, according to Forbes Ukraine, the company was worth USD 500 million.

The Sakhalin gas field, located in the Kharkiv region, is Ukrnaftoburinnya’s main business asset. The company first received the licence in 2004 and has been on the verge of losing it many times since. According to Ukrnaftoburinnya's estimates, the company produced more than six billion cubic metres of gas from the field in 2010 to 2022 alone. The Sakhalin field is currently 75 percent depleted, Mr Zakrevsky notes, with only 2 to 2.5 billion cubic metres of gas remaining.

Nine-year-old case

It is not entirely clear what the case against Ukrnaftoburinnya is about.

According to a court decision that arrested the company’s corporate rights last month, the investigation belived Ukrnaftoburinnya's shares to be material evidence in the proceedings of the prosecutor general's office.

The case, opened back in 2014, relates to the suspected illegal seizure of the state-owned NJSC Nadra of Ukraine's share in joint venture projects with partner companies that produced natural gas at the Sakhalin gas field.

Ukraine’s state bureau of investigation (DBR) estimates the state's losses at "tens of millions" of hryvnias.

According to the investigation, since the 2000s, Nadra of Ukraine cooperated with the companies Sakhalinske, Sirius-1 and Devon, allegedly linked to Mr Kolomoiskyi's business partners – Pavlo Fuks and Ihor Kotvitsky, an associate of former interior minister Arsen Avakov.

While Mr Fuks himself does not confirm his involvement in these companies, in February, security service (SBU) and DBR officers searched his and Mr Kotvitsky's homes as part of the same proceedings. Back then, security forces seized from the businessmen draft records and documents, computer equipment, communications equipment and almost UAH 23 million in various currencies.

The investigation claims that the companies allegedly received the opportunity to produce gas from the field in violation of procedures and deliberately underestimated production volumes to reduce the state's share. Moreover, according to the prosecutor general's office, under the terms of the contract with the state-owned Nadra of Ukraine, private firms were given the opportunity to distribute profits and control gas production at the Sakhalin field.

At the same time, per the investigation, the government spent more than UAH 1 billion on the development of the field.

The DBR believes that the scheme allegedly operated under the patronage of a former MP. While their name is not disclosed, it is likely to be Mr Kotvitsky, who first entered parliament in 2006. In light of the allegations, the court also arrested shares in private companies linked to Messrs Fuks and Kotvitsky in April.

What does Ukrnaftoburinnya have to do with it?

According to the investigation, in 2013, after Nadra of Ukraine (allegedly) illegally sold its shares in the agreements with Sakhalin, Sirius-1, and Devon to Golden Derik, a company renamed East Upstream Petroleum in 2017, Ukrnaftoburinnya became their partner.

According to the prosecutor general's office, this may have been a premeditated conspiracy that allowed private companies to appropriate the state's oil and gas resources.

Economic Pravda, a news media outlet, reported in 2017 that before the Revolution of Dignity, Devon and Golden Derik were associated with Mr Stavytsky. After he fled to Russia, the companies were allegedly bought out by Mr Fuks, who also became a shareholder in Ukrnaftoburinnya.

Poor prospects ahead

Ukrnaftoburinnya calls all suspicions against it "absolutely unjustified", and security services’ work "an attempt to seize liquid assets of a private business".

According to RBC-Ukraine, a news media outlet, the assets of Mr Kolomoisky's companies and partners may be claimed by Ukrnafta, was seized from the oligarch by Ukraine’s defence ministry last year.

"If someone believes that the company has caused damage to the state, it must be legally proven and calculated, and the company’s shareholders offered to reimburse such losses in favour of the state," Ukrnaftoburinnya said in a statement to

The company stressed that it did not understand why the company's shares had been arrested without their presence in court, and there were no suspects in the case when the investigation filed for the arrest.

"The arrest is based solely on assumptions and premature conclusions that are not supported by any documents or circumstances," Ukrnaftoburinnya added.

Eventually, the story took an unexpected turn.

On 3 May, a court in Kyiv cancelled the arrest of the oil and gas company’s securities at the company's request. The very next day, however, the same court again sided with the investigation following media reports.

The prosecutor's office said it did not know why the court cancelled the arrest of Ukrnaftoburinnya's corporate rights. The DBR, in turn, vowed to act quickly if the same happened again.

"The state interests have always been a priority for the DBR," the bureau stressed in a statement.

However, this story may have the opposite effect. Back in April, JKX, a minority shareholder in Ukrnaftoburinnya, announced that it was going to sue the Ukrainian state, including in international courts.

"Apparently, this is how certain government agencies believe issues with private business are resolved to make the country look 'attractive' to potential investors," Ukrnaftoburinnya said in a statement, ironically.

It said that at the time the company's shares were arrested, it had UAH 1.2 billion in its accounts, more than 160 million cubic metres of gas pumped into Ukrtransgaz's underground storage facilities, and about UAH 16 billion in retained earnings.

It is unlikely the government will succeed in using the arrested assets effectively, Oleksandr Sirenko, editor of Naftorynok, a magazine writing on the oil and gas market in Ukraine, told

"What government agencies have done has already wrecked havoc in the natural gas market. Part of gas production has been halted, and companies whose assets have been taken over by the ARMA face an uncertain future," he believes.

The asset management agency has been struggling for a year trying to manage the chain of Tatneft petrol stations in the Kharkiv and Poltava regions, Mr Sirenko adds. "Who can guarantee that Ukrnaftoburinnya's wells will not be left standing?"

Mr Zakrevskyi of EnergoDzherela shares the view. In his opinion, any unplanned changes in the company's shareholder structure could have a negative impact on its performance.

According to Ukrnaftoburinnya's estimates, from 2010 to 2022, the company invested more than UAH 6 billion in the Sakhalin field, which ultimately allowed it to increase its natural gas production by 40 to 60 percent annually, says Mr Sirenko.

He estimates that Ukrnaftoburinnya produced about 700 million cubic metres in 2022, operating 70 wells. Mr Zakrevsky's estimate is less optimistic, up to 400 million cubic metres.

"In my opinion, Ukrnaftoburinnya should not have been touched. This year, the company was going to build a booster compressor station worth UAH 500 million. This would have increased production by 15%," the analyst says.

"I don't know whether the state will have UAH 500 million for the development of Ukrnaftoburinnya now, but if the state simply takes it for itself and does not continue to develop the company, its production could fall by 100 million cubic metres a year."