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  • IMF Team Goes Home on Good Note
  • Foreign Investors Eye Hryvnia Bonds
  • Black Sea Ports Draw World Class Operators
  • Shipbuilding Revives
  • Regional Airports Discover Europe: Kharkiv-Paris, Odesa-Rimini, Zaporizhie-Barcelona
  • Canadian Gas Co. Joins UGV To Bid for 50-year PSAs
  • US to Russia: Hands off Cyprus Gas
  • Danes, Americans Plan $250 million for Georgia’s Poti – a Russia Bypass Port
  • More Sun Oil Tankers For the Dnipro
  • Chinese Electric Buses to be Assembled in Ukraine
  • Real Wages, Real Retail Sales Show Solid Growth
  • Baltic-to-Black Sea Container Train to Start
  • Singapore’s Delta Wilmar Bets on Food Processing, Buys Chumak
  • World Bank OK’s $200 Million Ag Loan
  • After EU Gas Prices Drop in Half, Naftogaz Cuts Prices 8%
  • Halliburton Eyes $100 Million Fracking Deal with UGV
  • Foreign Bankers Named to State Bank Boards
  • Industrial Output Jumps 5%
  • As IT Eats Up Kyiv Office Space, Plans Unveiled for $50 Million Business Center

 Although the IMF review mission stayed in Kyiv for half of the expected two weeks, it left Wednesday on a positive note. “The IMF staff team has had very productive discussions with the Ukrainian authorities, including with President Zelenskiy,” team leader Ron van Rooden said Thursday. “The team has found that fiscal and monetary policies remain on track, and it stands ready to return to Kyiv to continue discussions after the forthcoming parliamentary elections as soon as a new government has clarified its policy intentions.

Foreign investment in Ukrainian government treasuries inched up again with Tuesday’s weekly auction, rising 2.1%, to UAH 42.3 billion, or $1.6 billion. Attracted by high interest rates and a stable currency, foreign investors have increased their holdings in the internal state bonds almost seven-fold since the start of the year.

Foreign investor interest in hryvnia bonds, combined with the political transition period mean that the Finance Ministry plans to focus this summer on hrvynia bond sales, pushing off new Eurobonds until late summer or early fall, Liga.net reports, citing Wednesday’s Finance Ministry/IMF conference call with investors.  With demand strong, the Finance Ministry cut the interest rate on its 3.5 month treasuries from 18.5% last week to 17.89% this week.

With Naftogaz needing cash to fill reservoirs with 20 billion cubic meters of gas before the winter, US Energy Secretary Rick Perry told reporters in Kyiv last week that the US could provide guarantees to Naftogaz for the placement of Eurobonds for $2 billion. “This is one of the possible solutions,” he said.  “However, there may be other financial sources. There are different ways to finance the purchase of gas.”

World class port operators are starting to work in Ukraine’s Black Sea ports, Serhiy Vovk, director of the Center for Transportation Strategies, told Odesa’s Ukrainian Ports Forum 2019

  • P & O Maritime entered Ukraine over the last year, first towing vessels in Pivdennii (Yuzhne), then in Chornomosk, and this month, in Odesa.
  • South Korea’s Posco International bought 75% of a grain terminal in Mykolaiv.
  • Cargill will open in September a joint venture terminal in Pivdennii capable of handling half a million tons of grain a month.
  • The Louis Dreyfus company and its Ukraine partner, Brooklyn-Kyiv, signed an agreement at the Forum to build a 3 million ton a year grain terminal in Odesa.

As bigger and bigger ships serve Ukrainian ports, a record load of 63,000 tons of Ukrainian sunflower meal is approaching China. In mid-May, the JY Lake, a Panamax-class vessel, took on the load, partly at Mykolaiv’s Nika-Tera terminal, and partly in the waters off Ochakiv, with floating cranes. Ukraine’s previous record was 62,000 tons of meal shipped in January.

Aiming to transform Pivdennii port into ‘the Black Sea-Mediterranean vegetable oil hub,’ the Allseeds Group has more than doubled its storage tank capacity for sunflower and soy oil to 100,000 tons. Pumping 1,200 tons of cooking oil an hour, the company can now simultaneously load six ships docked at its Pivdennii six quays. Under its investment plan, the company plans to triple its oil handling capacity by the end of 2021.

Catering to Ukraine’s surging market for used cars from the EU, Euro Marine Logistics has started regular service between Greece and Chornomorsk of the “City of Amsterdam,” a roll-on/roll-off vessel. Just as Ukraine lowered import duties on late model year used cars, European countries and cities started imposing restrictions on diesel cars. In Ukraine, sales of used car imports now outstrip sales of new cars.

Shipbuilding and ship repair – a 200-year-old business in Ukraine – are reviving after a deep post-Soviet decline, according to statistics posted on sudostroy.com news site. Revenues for the industry climbed by one third last year, to $113 million. Last year, 108 boats were repaired and 25 boats were built.

Examples:

  • Smart Maritime Group, which has shipyards in Mykolaiv and Kherson, is building a third 110-meter, €2 million chemical tanker for Holland’s Veka Group. Smart Maritime Group revenue doubled last year, to $23 million.
  • The Danube Service Company shipyard in Izmail completed its second barge for the Grain-Transshipment Company. This Mykolaiv-based company is using the Izmail shipyard to renovate its entire fleet of eight barges for use on the Dnipro and the Southern Bug.
  • Nibulon puts to work in September, ‘Nibulon Max,’ a new transshipment vessel that will allow the company to transfer total of 40,000 tons of grain a day from river boats to sea vessels, without using land ports. Nibulon has a fleet 75 vessels, largely built in the company’s Mykolaiv shipyard.
  • Artel-Stroy of Mykolaiv is building a third tourist catamaran for Nibulon. Designed to carry 120 passengers, the 3-deck vessel will make summer excursions on the Dnipro, the Bug estuary and the Black Sea coast.

Regional airports received a boost last week as SkyUp started regular flights from Kharkiv, Odesa and Zaporizhie to Barcelona. Through June 11, SkyUp rolls out new flights from Kharkiv to Odesa, Rimini, Kutaisi, Larnaca and Paris. Next week, SkyUp starts flying from Odesa to Kutaisi and Rimini. On June 15, UIA starts flying three times a week between Odesa and Vilnius.

Targeting the Ukrainian market, Ryanair has unveiled a Ukrainian language version of its reservations website. By Nov. 1, Europe’s largest airline plans to double its Ukraine routes, to 33. On June 16, Ryanair starts flying from Odesa to Krakow and on June 17 from Kharkiv to Krakow.

Canada’s Vermilion Energy Inc. is pairing with UkrGazVydobuvannia to jointly apply for product sharing agreements to develop four oil and gas fields. If they win the 50-year contracts this month, the two companies are obliged to invest and take profits on a 50/50 basis. Based in Calgary, Vermilion already has projects in eastern Europe, in Hungary and Slovakia. Tuesday was the deadline for filing bids for the nine onshore production sharing agreements.

“This is the first major oil and gas company since Shell to invest in Ukraine for the purpose of extraction of natural gas,” said Andriy Favorov, gas business director for Naftogaz, the parent of UGV. Andriy Kobolyev, Naftogaz CEO, writes on Facebook: “Vermilion is ready to provide the latest and unique technologies of geological exploration, drilling, development, environmentally friendly technologies for the development of oil and gas fields.”

“Ukraine announces massive licensing rounds in 2019,” headlines a story on WorldOil news site. The story notes that concession licenses for nine more oil and gas blocks will go up for auction on June 18. In the two auction rounds this year, licenses were awarded for only nine of the 17 blocks offered. Only Ukrainians gas producers won acreages: UGV, Burisma Group, DTEK Oil & Gas, and Yedyna Oil & Gas Company. By the end of June, winners are to be chosen for the 10 production sharing blocks up for bid.

In the latest step to restore the Dnipro as a working river, TransShipOil plans to increase its river fleet from three ships to five this summer, reports the Center for Transportation Strategies. TransShipOil tanker ships work the lower 700 km of the Dnipro, picking up sunflower oil at six river stations — between Svitlovodsk and Ochakiv, the Black Sea port. The new tankers, with average cargo capacities of 3,000 tons, have been imported and reflagged for use in Ukraine. Ukraine is the world’s largest exporter of sunflower oil.

 On June 19, the EBRD board is expected to approve leading an €80 million syndicated loan to support renewable energy and energy efficiency in Ukraine. The EBRD would cover half of the loan, which would go to Ukreximbank, the nation’s third-largest bank in terms of assets. With many buildings and factories built in the era of cheap Soviet gas, Ukraine is investing to modernize and winterize.

Retail sales are up 7.9% in real terms for January-April, compared to the same period last year. Sales grew by 9.1% in April, fueled by the highest level of consumer confidence since Januar 2014. April’s consumer confidence level of 72 points, seems to reflect optimism surrounding the presidential election. Noting that first quarter real wages were up 10.9% q-o-qICU writes: “Consumer demand keeps rising thanks to solid growth in real household income.”

Chinese Skywell electric buses will be assembled in Ukraine under an agreement reached Tuesday, reports Elektrovesti.net. Produced by Nanjing Golden Dragon Bus Manufacturing Co., Skywell buses are now in use in Kyiv and Vinnytsia. Initially, the buses are expected to arrive here in SKD, or semi knocked-down, form.

A weekly Baltic-to-Black Sea container train will start this summer, according to an agreement signed Tuesday in Odesa by executives of the railroads of Lithuania, Belarus, and Ukraine. Called Containerships, the Klaipeda-Brovary-Odesa train will be the 18th regularly scheduled container train in Ukraine, according to Yevhen Kravtsov, Ukrzaliznytsia CEO. In March, a similar north-south container train starting rolling on a Belarus-Ukraine-Romania route. In April, UZ launched an east-west container train on a 1,400 km route between Nizhnedneprovsk and Sławków, Poland. Also in April, a test container train passed through Ukraine on a China-Hungary route.

To speed Ukraine-EU rail freight, Poland is investing in upgrading two rail crossings – Medyka-Mostyska, on the Lviv region border, and Dorohusk-Yahodin, on the Rivne border. Within the framework of the Germany-Poland-Ukraine transport corridor, tracks, switches, and traffic control devices are being upgraded. The goal is for the lines to carry longer and heavier freight trains, reports the Center for Transportation Strategies.

 Increasing investment in food processing, Delta Wilmar has bought Dragon Capital’s stake in Chumak, Ukraine’s leading producer of ketchup, mayonnaise, and tomato paste. It perfectly fits our group strategy of further downstream integration into food processing with high added value,” said Yuriy Golianych, general director of Delta Wilmar, the Ukraine unit of Singapore’s Wilmar International Ltd, widely considered to be Asia’s largest agribusiness group.

Separately, Delta Wilmar is building a $32 million vegetable oil processing plant at at Pivdenii, Ukraine’s largest port. Also at the port, formerly called Yuzhne, Delta Wilmar plans to build a plant capable of processing 2,000 tons of soybeans a day.

Setting a target of boosting Ukraine’s farm productivity by 30% by 2025, the World Bank approved Friday a $200 million loan for wide-ranging support to small and medium farmers. Noting that agriculture accounts for 42% of exports, the program aims to help farmers meet import requirements of the EU, China, the Gulf, the US, and Canada. An advocate of a private farmland market for Ukraine, the World Bank will pay for preparatory steps: transparency in land lease markets; registration of all state land; and strengthening land rights by raising owner awareness of their rights.

With European gas prices falling, Naftogaz is cutting gas prices by 8% for households and industrial users, to about $220 for 1,000 cubic meters. Since September, the EU natural gas import price has almost dropped in half. This came too late for President Poroshenko who took a highly unpopular move in November to raise gas prices 23.5% toward European levels. He lost the election in April.

Halliburton Ukraine has signed an initial agreement for a $100 million deal with Naftogaz to introduce modern ‘fracking’ techniques to Ukraine, 3D modeling of gas fields and lateral drilling for 26 wells. The deal between the Ukraine unit of the Texas company and UkrGazVydobuvannya, the Naftogaz production company, is designed to unlock 2 billion cubic meters of gas, the equivalent of 13% of UGV’s production last year.

Following Monday’s launch of government bond trading through the Clearstream depository, primary placements of hryvnia government bonds are to be also handled by the international trading platforms Refinitiv and Bloomberg Tradebook by the end of this summer, according to the National Bank of Ukraine. Currently, Ukrainian stock exchanges handle most primary and second trades of Ukrainian government bonds, about 100 billion hryvnias in trades during the first quarter of this year. Interfax-Ukraine reports that Ukraine’s Securities and Stock Market Commission says foreign-based trading platforms need to get permission to handle the trades.

With all air passengers counted for last year, Ukraine stands out as the air traffic leader of the former Soviet Union, ex-Russia. Of the 20 airports handling 1 million passengers of more, five are in Ukraine. Kyiv Boryspil leads the list with 12.6 million. Here is the ranking, in millions of passengers: Kyiv Boryspil — 12.6; Riga – 6.1; Almaty – 5.7; Vilnius – 4.9; Minsk – 4.5; Baku – 4.4; Astana — 4.3; Tbilisi – 3.8; Tallinn and Tashkent – 3; Kyiv Sikorsky – 2.8; Chisinau – 2.8; Yerevan – 2.7; Ashgabat – 2.5; Bishkek – 2; Lviv – 1.6 ; Odesa – 1.4; Dushanbe – 1.3; Kaunas and Kharkiv – 1.

 The European Investment Bank is loaning €200 million for the restoration of key infrastructure in government-controlled parts of Donetsk and Luhansk, Jean-Erik De Zagon, the bank’s Ukraine representative, tells reporters. The government has selected 293 projects totaling €110 million, largely for the repair of hospitals, clinics, schools, kindergartens, and apartment buildings. Loaned at concessional low interest, long term rates, the loan is part of the bank’s total Ukraine loan portfolio of €5.8 billion.

 Veteran bankers from Citibank, ING, EBRD and BNP Group are among the foreigners appointed to supervisory boards of three state-owned banks – Oschadbank, Ukreximbank and PrivatBank. Steven Fisher, formerly Citi’s Ukraine director, and Dominique Menu, formerly of BNP, have been named for Ukreximbank. Sevki Acuner, former EBRD director for Ukraine, and Peter Briggs, formerly of ING Group, go to Oschadbank. For the full list: https://www.minfin.gov.ua/en/news/view/uriad-pryznachyv-novi-nahliadovi-rady-pryvatbanku-ukreksimbanku-ta-oshchadbanku?category=derzhavni-banki-ukraini.

 Industrial output unexpectedly jumped by 5.2% y-o-y in April, the biggest increase in over two years, reports the State Statistics Service. The locomotive was construction, growing by 30% y-o-y. While residential construction was almost flat, infrastructure construction was up 45% and commercial was up 41%. Other hot spots identified by Alfa Bank are: food processing up 6.6% y-o-y; steel up 9.9%; machine building up 10.8% and chemical production up 14.7%.

 Kyiv’s tightening office real estate market is prompting Alexander Yaroslavsky’s DCH Group to revive a $50 million business center project at the northern end of Podol’s Mezhyhirska street. With construction planned for next year, the Class A office center would have 40,000 square meters of leasable space. The business center would be a 5-minute drive from Sergei Tigipko’s planned $600 million Rybalsky Peninsula ‘Lipki Island City Resort.’ This complex is to have 36 buildings with 6,200 apartments, 43,500 square meters of office space and 33,300 square meters of retail space.

 Both projects are to benefit from the Podolsko-Voskresensky Bridge which is to open for road traffic next year, according to Kyiv Mayor Vitali Klitschko. Under construction since 1993, the two-level, 7 km bridge is designed to carry 60,000 cars a day between Podol and the Left Bank. “Podolsko-Voskresensky is the largest arched bridge in Europe and will be one of the most durable in terms of loads,” Klitschko writes on Facebook. “It will be equipped with six lanes for automobile traffic and two railway tracks.”

 With a major bottleneck removed for EU-Ukraine rail traffic, the number of freight trains passing through the new Beskyd tunnel was up almost 19% in the first quarter of this year, compared to the same January-March period last year. Since the two-track tunnel opened under a Carpathian mountain ridge one year ago, on May 24, 10,500 freight trains with more than 500,000 cars have passed through, reports Yevhen Kravtsov, CEO of Ukrzaliznytsia.

 

 The original English version is from our partner UBN – Ukraine Business News. For more information and news archive, go to: www.ubn.news.