JKX Oil and Gas has suspended its planned 2015 capital investment programme in Ukraine following sales restrictions imposed on private gas producers.
The company said it would no longer carry out work until “economic parameter for investment improves”.
It means the company’s Skytop drilling rig is being stacked following the recent completion of well Ig-140 and operational and ancillary costs are also being reduced.
A spokesman said: “Further to the announcement of sales restrictions imposed on private gas producers by the Ukrainian Government Decree of 29 November 2014, JKX reports that it sold approximately 80% of its December gas production capacity to industrial customers, with only 20% of its gas production capacity shut-in during the month.
“The market available to private gas producers in Ukraine, however, continues to contract with competition for the increasingly limited number of credit worthy industrial customers becoming intense.
“JKX anticipates that gas sales may reduce to less than 50% of its production capacity in Ukraine whilst the Decree remains in force and will necessitate shut-in of a proportionate level of gas production.
“At the same time, the Ukrainian temporary level of tax on gas production of 55% has been incorporated into the Ukrainian tax code for 2015.”
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