Sales of technical oil and management failures: problems of Ukrnafta under the leadership of Koretsky

The Naftogaz report does not seem to confirm the thesis of the director of PJSC Ukrnafta and JSC Ukrtatnafta Sergei Koretsky about reducing Ukrnafta’s expenses.

On the contrary, as far as we know, the cost of sales increased from UAH 7.5 billion. in the first quarter of 2022 to UAH 9.6 billion. in the first quarter of 2023, and sales costs increased from UAH 0.9 billion. up to 1.3 billion UAH. for the relevant periods. That is, it turns out that the main driver of income growth was not a reduction in expenses, but an increase in sales income.

According to our sources, technical oil is supposedly now being sold, thanks to which transportation is ensured.

Technical oil is not just raw materials in pipes, but fixed assets of an enterprise. Its use allows you to keep oil pipelines in working condition, because without it, oil transportation becomes impossible. The latest pipeline preservation techniques indicate that the best solution is to store oil within the system, as it maintains the integrity of the pipelines. Inert liquids such as water should only be used in pipe sections where there is no risk of freezing. Thus, technical oil is a key element for the uninterrupted operation of oil transportation systems.

However, according to sources close to Koretsky, Ukrnafta allegedly decided to sell part of the technical oil to improve short-term financial performance, which now poses significant risks for the entire transportation system.

“The likely sale of this strategic resource poses a danger to the long-term stability of the oil infrastructure, since without sufficient oil reserves in the pipes, their normal operation will be disrupted,” the publication’s interlocutor notes.

This probable decision by Koretsky raises many questions, as do some of his other actions as a leader.

According to sources, one of his first steps in this position was allegedly introducing changes to the company’s Charter, which provided for the operation of Ukrtatnafta JSC without a seal, where all documents were signed personally by Koretsky. This, as they say, complicated the document flow, since each document needed notarization. After a wave of criticism and bureaucratic stoppages, the seal was returned a month later, but the incident highlights shortcomings in the organization of work at a strategically important enterprise.

In addition, during an inventory in November 2022, it was allegedly discovered that JSC Ukrtatnafta stored more than 140 thousand tons of petroleum products, including diesel fuel with Arctic properties for the needs of the Armed Forces of Ukraine.

“Despite the shortage of fuel on the market, Koretsky seems to have blocked its shipment during November and December. Therefore, problems with fuel arose at Ukrnafta gas stations, and only at the end of December the first deliveries of diesel fuel began,” says a source from Koretsky’s close circle.

These possible actions increased criticism of Koretsky, because in conditions of war and the critical need for fuel for the Armed Forces, the signing of contracts with the Ministry of Defense dragged on for more than two months.

At a time when gasoline, diesel and jet fuel were already ready for shipment in early November 2022, the company’s management, represented by Koretsky, seemed to be in no hurry to provide the necessary supplies.

In addition to fuel issues, decisions on employee benefits have also proven difficult. The previous management paid an advance for November before the change of management, but after that the new management, as far as we know, was in no hurry to pay wages, violating labor agreements and causing tension among workers.

According to unofficial information from a company employee, the formation of a new organizational and staffing structure lasted two months, and the signing of contracts with deputies and issuing powers of attorney to them for another month.

“Because of this, first deputy director Svyatoslav Datsik submitted his resignation after the first month of work and actually resigned from his position on September 9, 2024. Knowing Koretsky’s management style well, Datsik clearly understood the consequences of signing documents and orders without proper powers of attorney and authority. This created uncertainty for the deputies, and in a dangerous production environment, where everyone has their own area of ​​responsibility, this situation was unacceptable,” says the publication’s interlocutor.

In addition, it is alleged that Koretsky allegedly failed to implement plans to modernize energy facilities after missile attacks that damaged the infrastructure.

Due to damage from missile strikes to energy facilities around the refinery, Ukrtatnafta stopped its operations at the end of October 2022 and began urgent repair work at one of the re-damaged installations. These works were completed by December 20, 2022.

At the same time, agreements were concluded and financing began for the restoration of the power supply system and the construction of its own generation with a capacity of the first stage of 20 MW.

“The project implementation period allowed us to ensure reliable external energy supply after 3 months, and after 12 months to have our own electricity generation. However, to date these projects have not been implemented,” says the publication’s source.

According to him, Koretsky’s managers allegedly still go on business trips abroad, spending millions of hryvnia on trips, but the work remains at the level of plans and choice of options.

“For comparison, in 2022, after missile attacks on the Kremenchug Thermal Power Plant, plant specialists implemented four projects to provide the enterprise with process steam within 6 months. The plant became autonomous in tandem with the Kremenchug Thermal Power Plant. But such a rapid pace of project implementation was observed before Koretsky headed the company,” notes our interlocutor.

Everything seems to indicate that under the leadership of Sergei Koretsky, Ukrnafta and Ukrtatnafta have faced a number of management problems that call into question the effectiveness of his management. And this, as we learned, did not go unnoticed in the Office of the President. The media have already reported that Sergei Koretsky is one of the likely candidates for resignation in the next wave due to his own inability to lead a strategically important enterprise and large-scale corruption during the war.