HAСC will consider the case regarding the lowering of the price of the Svistunivsko-Chervonolutsk field

The National Anti-Corruption Bureau of Ukraine (NABU) together with the Specialized Anti-Corruption Prosecutor's Office of Ukraine (SAP) referred the case to the High Anti-Corruption Court (HACC) regarding the corruption scheme of Arkona Gas-Energy LLC obtaining the special permit of the Svistunkivsko-Chervonolutsk gas condensate field (Poltava region), at an artificially low cost, which caused UAH 196.8 million in losses to the state.

Among the accused:

• former deputy director for production, economics and general issues of the Ukrainian State Geological Exploration Institute (UkrSGEI);
• former head of the sector of geological and economic assessment of the oil and gas resource base of the department of geological and economic assessment of UkrSGEI;
• expert of the State Commission of Ukraine on Mineral Reserves (DKZ) and director of Proekt-Naftogaz NVF LLC;
• ex-director of Arkona Gas-Energy LLC;
• leading engineer of LLC Proekt-Naftogaz NVF (he is also an expert of the State Commission of Ukraine on Mineral Reserves);
• chief engineer of Proekt-Naftogaz LLC.

The actions of all six persons are qualified as an abuse of power or official position. Five participants in the crime (former manager, expert, ex-director of the LLC, and engineers) were additionally charged with official forgery.

As the investigation found out, during 2016-2017 Arkona Gas-Energy LLC repeatedly and unsuccessfully applied to the Ukrainian Geological Survey to obtain a special permit of the Svystunkivsko-Chervonolutsk gas condensate field without holding an auction. However, later the composition of the company's owners changed — state and local authorities revised their attitude to the company's appeals.

In April 2017, the Poltava Regional Council, after several previous refusals, agreed to the State Geological Survey granting a special permit for the geological study of the Arkona Gas-Energy field without holding an auction.

After that, according to NABU, the participants of the corruption scheme divided roles and developed a plan to understate the amount of the fee for issuing the specified special permit.

For this, they used non-existent indicators of project gas and condensate production, capital investments, and operating costs, including depreciation deductions. As a result, the initial sale price of the special permit was set at UAH 3.8 million. At the same time, the initial cost of selling the special permit should amount to UAH 200.6 million. The calculated difference between the actually paid cost of the fee and the valid initial sale price of the special permit is UAH 196.8 million, which is the amount of losses caused to the state budget of Ukraine.

In July 2020, NABU and SAP notified six persons of suspicion of organizing this scheme. The investigation was completed in September 2021. The investigation also establishes other persons involved in the commission of the crime, the investigation in this part is allocated to a separate criminal proceeding.

The reasons for starting the investigation were the statement of one of the people's deputies of Ukraine and the plot of the journalistic investigative program "Scheme".

It will be recalled that in 2004-2014, the special permit for the Svistunivsko-Chervonolutsk field was owned by Ukrnafta PJSC, which sued Arkona Gas-Energy regarding the special permit issued to the company for this field. The State Geological Survey also took part in the case and declared the legality of its decision.

ExPro reference

Arkona Gas-Energy LLC joined the Smart Energy group of companies in March 2020 because of its acquisition by the British public company Enwell Energy, which in turn is part of the Smart Energy group.

Arkona has a special permit for the use of the subsoil of the Svistunkivsko-Chervonolutsk field. The company received it in May 2017 for a period of 20 years, with a further right to extend it. The area of the special permit is 97 km2 and is administratively located in the Hadiatskyi and Lohvytskyi districts of the Poltava region in the north-east of Ukraine, 15 km from another field of the Smart Energy group – Svyridivskyi.