Smart Holding Restores Gas Production in Kharkiv Region Amid Energy Crisis

22.08.2024

Smart Holding Group has restarted gas production at one of its key sites in the Kharkiv region after more than a year of forced downtime. The company has resumed extraction at the Vasyshchevsky gas field, following the Ukrainian government's decision to reinstate hydrocarbon extraction licences that were suspended in 2023.

The temporary shutdown had forced two of the group's key subsidiaries – Ukrgazvydobutok and Prom-Energo Produkt – to stop production. This government-imposed decision, made at the height of Ukraine’s energy crisis, deprived the country of nearly 1.65 billion UAH in tax revenues and 195 million cubic metres of much-needed natural gas.


We acted swiftly following the lifting of restrictions to resume production. Within just a month, we were able to bring the first company back online. However, the journey to full restoration has been challenging. Our priority was to comply with all legal and regulatory frameworks, ensuring safe and sustainable operations,” said Julia Kiryanova, CEO of Smart Holding.

Kiryanova highlighted the rigorous process involved: “We conducted thorough technical diagnostics, procured new equipment where needed, and reinforced security protocols. On top of this, we had to reassemble our team and fine-tune operations under immense time pressure. Despite these challenges, we succeeded in restoring initial production.”

Impact of long-term disruptions. Before the forced stoppage, Smart Holding’s Kharkiv-based companies were extracting an average of 450,000 cubic metres of gas per day. Following the shutdown, the group is now producing at significantly lower levels. Initial output from the Vasyshchevsky field is 25,000 cubic metres per day, about half of what it was before the suspension.
The long halt naturally affected productivity. Wells that remain idle for extended periods lose capacity, and we’re currently working to bring production back up. Unfortunately, last year’s attack by Russian forces on one of our key gas processing facilities further complicated matters. Substantial damage was inflicted on the facility, which will require a significant amount of time and investment to restore,” Kiryanova explained.


Turning the Tide: long-term investment and innovation

Julia Kiryanova stressed that, while the challenges have been immense, the company is focused on looking ahead. “We welcome the government’s recognition of the counterproductive effects of the licence suspensions. The energy sector plays a critical role in Ukraine’s economy, especially as the country braces for another tough winter. It’s essential that business and government work hand in hand to avoid further disruptions and to rebuild what has been lost.”

Smart Holding is already exploring ways to fast-track its long-term development plans. These include expanding its drilling programme, building new infrastructure, and modernising equipment to ensure future production meets pre-war levels. "Our investment strategy is clear – we’re committed to reinforcing Ukraine’s energy security, not just in the short term, but well into the future," said Kiryanova.

Resumption of operations across fields.
On 26 June 2024, Ukraine’s State Geological Service reinstated extraction licences for Smart Holding’s companies, not just for the Vasyshchevsky and Ostroverkhivske fields, but also for the Svyatynkivsko-Chervonolutskyi field. The group is now preparing to restart operations across these fields, which will contribute significantly to the country’s energy supply ahead of the heating season.


As a business deeply rooted in Ukraine’s energy landscape, we understand our responsibility to both the country and its people. Our commitment is not just about restoring what we’ve lost, but about ensuring a stronger, more resilient energy future for Ukraine,” Kiryanova concluded. “We’ll continue to invest, innovate, and collaborate with government and industry partners to build an energy sector that supports Ukraine’s long-term goals.”

About Smart Holding Group

Smart Holding Group is one of the largest industrial investment groups in Ukraine, with a strong focus on the exploration and production of hydrocarbons. It is among the top five private gas producers in the country, with pre-war daily production exceeding 1 million cubic metres of gas per day. Smart Holding’s oil and gas interests are represented by Ukrgazvydobutok in the Kharkiv region and the publicly listed Enwell Energy in the UK, which operates assets in Poltava through Regal Petroleum Corporation Limited and Arkona Gas-Energy.