Zhoda Investments' oil operations in Ukraine continue to develop despite the challenges posed by Russia's invasion.
'It has now been three years since Russia launched its full-scale invasion, and Ukraine is enduring one of the most difficult periods in its history. Global political statements and maneuvers have intensified, and we have yet to see what they will result in. Despite this, we continue to operate and develop Zhoda's oil business. Daily operations at the oil field proceed as usual, and we continue to sell oil. In 2024 we have also launched a work program to increase production. Despite having allocated capital to our investments in the field, the oil business has generated sufficient liquidity to distribute a dividend to Zhoda. We have also engaged legal experts to assess the feasibility of initiating legal proceedings at the Permanent Court of Arbitration in The Hague to seek compensation for gas assets in the Black Sea that were confiscated by Russia', says Robert Karlsson, CEO of Zhoda Investments.
Status of Zhoda's oil operations
Zhoda has a joint venture with Ukraine's largest state-owned oil and gas company. The oil field, in which Zhoda holds a 45% interest, is located approximately 150 kilometers east of Kyiv. Daily operations continue as planned, and oil production is ongoing.
Although the war in eastern Ukraine affects business and working conditions throughout the country, daily life continues in Kyiv and at the oil field, making further development possible.
Work program to increase production
Production declined during the pandemic and continued to decrease after the invasion, primarily due to lower investments in the wells. To reverse this trend, the field operator launched a work program in 2024 to repair wells that were previously drilled but are currently non-producing due to technical reasons. Despite total production decreasing by 14% in 2024 to 17,000 barrels, monthly production in December 2024 was 19% higher than in August of the same year, thanks to the workover and reactivation of several wells.
Profitable oil operations contribute to Ukraine's energy supply
Despite challenging conditions, the oil business remains profitable and contributes positively to the group's overall results. The oil is sold through state auctions and is refined and consumed within Ukraine, strengthening the country's energy supply and independence. Zhoda will report more detailed financial figures later this spring.
Cash flow and dividends
As previously communicated, the positive cash flow generated in 2023 was used to strengthen the balance sheet of the Ukrainian company. This has enabled the oil operations to distribute a dividend of SEK 4 million to Zhoda in 2024.
Offshore assets in the Black Sea
One of Zhoda Investments' subsidiaries has been a partner for approximately 15 years with a Ukrainian state-owned company to develop gas licenses in the Black Sea. After Russia's annexation of Crimea in 2014, these assets were illegally seized. Recently, the Ukrainian state was awarded USD 46 million (equivalent to SEK 500 million) plus interest by the Permanent Court of Arbitration in The Hague for its 50% stake in these gas assets. Zhoda holds rights to the remaining 50% and therefore notes that an international court has confirmed both the illegal seizure of these assets and their estimated value of SEK 500 million. In early 2025, Zhoda engaged legal experts to evaluate the feasibility of pursuing a claim at the same court for compensation related to the confiscated Black Sea gas assets. This assessment is expected to be completed in the spring of 2025.
All production and financial figures refer to Zhoda's 45% share.
Source: Zhoda Investments
