SMART ENERGY: Unjustified Search in Regal Petroleum Offices

22.11.2016

SMART ENERGY Group considers as unjustified the search in the territory of the Representative Office of Regal Petroleum Corporation Limited, a member of the Group and a listed British company having the assets in Ukraine.

On 09 November 2016, representatives of the Poltava Office of the National Police Department for Economic Crime made a search on the site of the Company’s Gas Processing Plant located near the village of Yakhnyky, Lokhvitsa district of Poltava region. As an ‘explanation’ for the operation, the police claimed that the Company did not have the permits and licenses for subsurface resources and land use, and that it was selling the produced products for cash. Yet formally, the criminal proceedings were initiated in relation to a different matter, in particular, in relation to the issue of adherence to the safety regulations by the contractor during the workover at well no.6 located near the village of Sviridovskoye, Lokhvitsa district, where in October 2015 some technical complications occurred that had no influence on operation of other facilities.

Furthermore, the National Police representatives refused to go through the health and safety (HSE) induction briefing that is a mandatory requirement in order to get access to high-risk facilities, according to the Ukrainian legislation. Therefore, the search on the production site was made with a conscious gross breach of HSE standards, which to a certain extent was jeopardizing the industrial safety, as well as creating certain threat to safety of all the people present on the site, both the Company employees and the law-enforcement officials.

SMART ENERGY Group herewith declares that the Representative Office of Regal Petroleum Corporation Limited carries out its activities transparently and in full and unconditioned compliance with the Ukrainian and the UK laws. Both the management team and employees of SMART ENERGY Group have never evaded giving explanations to the law-enforcement authorities; any documents needed to ascertain the truth have always been provided to the police upon the first request.

This was not the first attempt of the police to interfere with the activities of the UK Company’s Representative Office under the pretence of a phony crime. Moreover, during the previous search, the Company provided the police with all the explanations and requested documents, including licenses and permits. However, ignoring the findings of the previous investigation, the law enforcement officials were again trying to seize the documents they had already been given. By doing so, the National Police representatives were not only willfully ignoring the provided evidence, but also were trying to hamper the business activities of the Representative Office of Regal Petroleum Corporation Limited.

The Company is one of the largest taxpayers in Poltava region and is actively involved in the social and economic development of Lokhvitsa and Chernukhinsky districts where it operates. Over 10 months of 2016, the Company has paid UAH 190 million of taxes to the budgets of various levels and special-purpose funds, and invested UAH 1.7 million into the region’s social infrastructure.

Reference

Smart Energy is a part of Smart-Holding and a management company that implements exploration projects, commercial development of hydrocarbon deposits and alternative energy initiatives. Smart Energy provides comprehensive consulting services in the areas of management, engineering and business process optimization to the companies of Smart Energy Group. Oil & Gas business block of Smart-Holding is represented by Regal Petroleum, a listed British company having the assets in Ukraine, as well as by the Ukrainian gas producers Prom-Energo Product and Ukrgazvydobutok.

Representative Office of Regal Petroleum Corporation Limited holds special permits (licenses no.3334 and no.3335 dated 01 July 2004 both valid through 2024) for commercial development of Mekhedovsko-Golotovshchinskoye and Sviridovskoye gas and condensate fields located in Poltava region.

Sales of products by Regal Petroleum Corporation Limited are only made against cashless payments, including the sales transactions through the electronic trading platform Fabrikant.ua.