You're reading: Prokhorenko, CEO of state gas producer, to be fired

Ukraine’s state oil and gas monopoly Naftogaz on Feb. 8 announced it is to terminate its contract with Oleg Prokhorenko, the CEO of gas producer UkrGazVydobuvannya, or UGV, a subsidiary of the state monopoly, on March 15.

Since he started working for the company in June 2015, Prokhorenko has made UGV’s procurement more transparent and eliminated corruption schemes that had immersed the national joint-stock company in scandal. He increased the company’s gas production by focusing on the innovative technology of hydrofracking.

“Taking control of the company in the face of extremely limited resources, Oleg managed to prevent the production decrease in gas extraction,” CEO of Naftogaz Andriy Kobolyev said in an official statement of Prokhorenko’s dismissal on Feb. 8.

“He made undeniable progress in the modernization of UGV and introduction of new technologies intensifying production in particular.”

The announcement said that Prokhorenko’s termination is part of the “transformation of the Naftogaz group and the creation of business-line divisions.”

Prokhorenko would not comment to the Kyiv Post on the termination of his contract with Naftogaz.

In a statement quoted by Naftogaz, Prokhorenko did not specify the reasons for his dismissal and thanked UGV and Naftogaz for their trust and support for his rebuilding of the company.

“We have changed the trend of gas production in Ukraine from decline to growth, created a market for services in gas extraction, updated obsolete facilities and equipment, creating the preconditions for increasing natural gas production in the future,” Prokhorenko said.

After Prokhorenko resigns in March and before Naftogaz’s supervisory board selects a new CEO, his duties will be performed by Andriy Favorov, the director of Naftogaz’s integrated gas business branch.

In November 2018 Prokhorenko was removed from the board of directors of Naftogaz. According to the sources of Ekonomichna Pravda news website, Prokhorenko requested the move because he was unsatisfied with the speed at which the salaries of UGV’s top-managers and his own were reviewed.

Ekonomichna Pravda also reported that Prokhorenko had clashed with Kobolyev when he refused to take over leadership of the gas division of Naftogaz, which is being restructured.

Enkorr news website reported that one of the reasons for Prokhorenko’s dismissal was his unwillingness to fire several managers whom Naftogaz wanted to remove.

In addition, UGV did not reach its target of producing 16.5 billion cubic meters of gas in 2018, falling 1 billion cubic meters short. The company said that it did not meet the target volumes because the local authorities systematically declined to issues licenses for new extraction sites. Still, the 15.5 billion cubic meters extracted in 2018 is the most UGV has produced for more than two decades.

Prokhorenko arrived at UGV in June 2015, when the company was reeling from corruption scandals. One involved former deputy Oleksandr Onyshchenko, who fled the country in 2016 amid accusations that he stole $110 million from the company.

Later, former Fiscal Service Chief Roman Nasirov was charged for allegedly allowing participants in the same scheme to delay tax payments, in exchange for a kickback.