НАК „НАФТОГАЗ УКРАЇНИ“. Річний звіт англійською (2017 рік) - 17

FINANCIAL STATEMENTS

ANNUAL REPORT 2017

261

260

In the event a decision is taken on 

further development of the field 

and from putting into operation 

of the first producing well, the 

Group classifies the capitalised 

exploration and evaluation costs 

related to this well as oil and gas 

extraction assets within property, 

plant, and equipment in the state-

ment of financial position.

Depreciation and depletion. 

Depreciation is charged to the 

consolidated statement of profit 

or loss on a straight-line basis 

to allocate costs of individual 

assets except their residual value 

over their estimated useful lives. 

Depreciation commences on the 

date of acquisition or, in respect 

of self-constructed assets, from 

the time an asset is completed 

and ready for use. 

Hydrocarbon extraction wells 

are depleted using a unit-of-pro-

duction method over a period of 

proved and probable hydrocar-

bons reserves. Specialised drilling 

tools and other fixed assets used 

to perform any work on the well 

are depleted using a unit-of-pro-

duction method based on rele-

vant output standard established 

by the Group. 

Other property, plant and 

equipment are depreciated 

on a straight line basis over its 

expected useful life. The useful 

lives of the Group’s other prop-

erty, plant and equipment are as 

follows:

Useful 

lives in 

years

Pipelines and related 
equipment

5–60

Machinery and 
equipment

3–60

Buildings

3–60

Drilling and exploration 
equipment

3–30

Other fixed assets

3–30

Construction in progress and 

cushion gas are not depreciated.

Intangible assets. Intangible 

assets have definite useful lives 

and primarily include licenses for 

exploration and extraction and 

capitalised computer software. 

Acquired computer software is 

capitalised on the basis of the 

costs incurred to acquire and 

bring it to use. Intangible assets 

are carried at cost less accumu-

lated amortisation and impair-

ment losses, if any. If impaired, 

the carrying amount of intangible 

assets is written down to the 

higher of value in use and fair 

value less costs to sell. 

Leases. Leases in which a sig-

nificant portion of the risks and 

rewards of ownership are retained 

by the lessor are classified as 

operating leases. Payments made 

under operating leases (net of 

any incentives received from the 

lessor) are charged to the con-

solidated statement of profit or 

loss on a straight-line basis over 

the period of the lease. Finance 

leases are capitalised at the lease 

commencement at the lower of 

the fair value of the leased prop-

erty and the present value of the 

minimum lease payments.

Decommissioning liabilities. 

The Group’s assessment of the 

decommissioning liabilities is 

based on the estimated future 

costs expected to be incurred in 

respect of the decommissioning 

and site restoration, adjusted 

for the effect of the projected 

inflation for the upcoming 

periods and discounted using 

interest rates applicable to the 

provision. Estimated costs of 

dismantling and removing an 

item of property, plant and 

equipment are added to the 

cost of an item of property, plant 

and equipment when the item 

is acquired, and corresponding 

obligation is recognised. Changes 

in the measurement of an existing 

decommissioning liability, that 

result from changes in the 

estimated timing or amount of 

the outflows, or from changes 

in the discount rate used for 

measurement, are recognised in 

the consolidated statement of 

profit or loss or, to the extent of 

any revaluation balance existence 

in respect of the related asset, 

in other comprehensive income 

or loss. Provisions in respect of 

decommissioning activities are 

evaluated and re-estimated 

annually, and are included in the 

consolidated financial statements 

at each reporting date at their 

expected present value, using 

discount rates which reflect the 

economic environment in which 

the Group operates.

Interest expense related to the 

provision is included in finance 

costs in profit or loss.

Impairment of non-financial 

assets. Assets are reviewed for 

impairment whenevents and 

changes in circumstances indicate 

that the carrying amount may not 

be recoverable. An impairment 

loss is recognised for the amount 

by which the assets carrying 

amount exceeds its recoverable 

amount. The recoverable 

amount is the higher of fair 

value less cost to sell and value 

in use. For purposes of assessing 

impairment, assets are grouped 

to the lowest levels for which 

there are separately identifiable 

cash flows (cash generating 

unit). Non-financial assets that 

have suffered impairment are 

reviewed for possible reversal of 

the impairment at each reporting 

date.

An impairment loss is recognised 

immediately in profit or loss, 

unless the relevant asset is carried 

at a revalued amount, in which 

case the impairment loss is 

treated as a revaluation decrease.

When an impairment loss 

subsequently reverses, the car-

rying amount of the asset (or a 

cash-generating unit) is increased 

to the revised estimate of its 

recoverable amount, but so that 

the increased carrying amount 

does not exceed the carrying 

amount that would have been 

determined had no impairment 

loss been recognised for the asset 

(or cash-generating unit) in prior 

years. A reversal of an impairment 

loss is recognised immediately in 

profit or loss, unless the relevant 

asset is carried at a revalued 

amount, in which case the 

reversal of the impairment loss is 

treated as a revaluation increase.

Classification of financial assets. 

The Group classifies its financial 

assets into the following measure-

ment categories: (a) loans and 

receivables; (b) available-for-sale 

financial assets.

Loans and receivables include 

financial receivables created 

by providing money, goods or 

services directly to a debtor, other 

than those receivables which 

are created with the intention 

to be sold immediately or in the 

short term, or which are quoted 

in an active market. Loans and 

receivables comprise primarily 

loans, trade accounts receivable 

including purchased loans and 

promissory notes. All other 

financial assets are included in the 

available-for-sale category.

Classification as debt or equity. 

Debt and equity instruments 

issued by the Group are classi-

fied as either financial liabilities 

or as equity in accordance with 

the substance of the contractual 

arrangements and the defini-

tions of a financial liability and 

an equity instrument.

Equity instruments. An equity 

instrument is any contract that 

evidences a residual interest 

in the assets of an entity after 

deducting all of its liabilities. 

Equity instruments issued by a 

Group entity are recognised at 

the proceeds received, net of 

direct issue costs.

Repurchase of the Group’s own 

equity instruments is recognised 

and deducted directly in equity. 

No gain or loss is recognised in 

profit or loss on the purchase, 

sale, issue or cancellation of the 

Group’s own equity instruments.

Financial liabilities. Financial 

liabilities are classified as either 

financial liabilities “at fair value 

through profit or loss (FVTPL)” or 

“other financial liabilities”.

Initial recognition of financial 

instruments. Financial assets 

and financial liabilities are initially 

measured at fair value.

The Group’s principal financial 

instruments comprise borrow-

ings, cash and bank balances. The 

Group has various other financial 

instruments, such as trade receiv-

ables and trade payables, which 

arise directly from its operations.

All purchases and sales of finan-

cial instruments that require 

delivery within the time frame 

established by regulation or 

market convention (“regular way” 

purchases and sales) are recorded 

at trade date basis, which is the 

date that the Group commits to 

deliver a financial instrument. All 

other purchases and sales are rec-

ognised on the settlement date 

with the change in value between 

the commitment date and set-

tlement date not recognised for 

assets carried at cost or amortised 

cost, and recognised in equity for 

assets classified as available-for-

sale.

Subsequent measurement of 

financial instruments. Subse-

quent to initial recognition, the 

Group’s financial liabilities, loans 

and receivables are measured at 

amortised cost. Amortised cost 

is calculated using the effective 

interest method and, for financial 

assets, it is determined net of any 

impairment losses. Premiums and 

discounts, including initial trans-

action costs, are included in the 

carrying amount of the related 

instrument and amortised based 

on the effective interest rate of 

the instrument.

The face values of financial assets 

and liabilities with a maturity 

of less than one year, less any 

estimated credit adjustments, are 

assumed to be their fair values. 

The fair value of financial liabilities 

is estimated by discounting the 

future contractual cash flows at 

the current market interest rate 

available to the Group for similar 

financial instruments.

Gains and losses arising from a 

change in the fair value of avail-

able-for-sale assets are recognised 

directly in other comprehensive 

income. In assessing the fair 

value of financial instruments, the 

Group uses a variety of methods 

and makes assumptions based on 

market conditions existing at the 

reporting date.

When available-for-sale assets 

are sold or otherwise disposed 

of, the cumulative gain or loss 

recognised in other compre-

hensive income is included in 

the determination of net profit. 

When a decline in fair value of 

available-for-sale assets has been 

recognised in equity and there is 

objective evidence that the assets 

are impaired, the loss recognised 

in other comprehensive income 

is removed and included in the 

determination of net profit, even 

though the assets have not been 

derecognised.

Dividends on available-for-sale 

equity instruments are recognised 

FINANCIAL STATEMENTS

ANNUAL REPORT 2017

263

262

in the consolidated statement of 

profit or loss when the Group’s 

right to receive payment is estab-

lished and the inflow of economic 

benefits is probable. Impairment 

losses are recognised in the con-

solidated statement of profit or 

loss when incurred as a result of 

one or more events that occurred 

after the initial recognition of 

available-for-sale investments. 

A significant or prolonged decline 

in the fair value of an instrument 

below its cost is an indicator that 

it is impaired. The cumulative 

impairment loss measured as the 

difference between the acqui-

sition cost and the current fair 

value, less any impairment loss on 

that asset previously recognised 

in the consolidated statement 

of profit or loss, is removed from 

equity and recognised in the 

consolidated statement of profit 

or loss.

Impairment losses on equity 

instruments are not reversed 

through the consolidated state-

ment of profit or loss. If, in a 

subsequent period, the fair value 

of a debt instrument classified as 

available-for-sale increases and 

the increase can be objectively 

related to an event occurring 

after the impairment loss was 

recognised in the consolidated 

statement of profit or loss, the 

impairment loss is reversed 

through current period’s consoli-

dated statement of profit or loss.

A provision for impairment of 

loans and receivables is estab-

lished when there is objective 

evidence that the Group will not 

be able to collect all amounts due 

according to the original terms. 

Significant financial difficulties 

of the debtor, probability that 

the debtor will enter bankruptcy 

or financial reorganisation, 

and default or delinquency in 

payments are considered to be 

indicators that loans and receiv-

ables are impaired. The amount 

of the provision is the difference 

between the asset’s carrying 

amount and the present value of 

estimated future cash flows. The 

carrying amount of the asset is 

reduced through the use of a pro-

vision account, and the amount 

of the loss is recognised in the 

consolidated statement of profit 

or loss. When receivables are 

uncollectible, they are written off 

against the provision account for 

receivables. Subsequent recover-

ies of amounts previously written 

off are credited in the consoli-

dated statement of profit or loss.

Derecognition of financial 

instruments. The Group derecog-

nises financial assets when (i) 

the assets are redeemed or the 

rights to cash flows from the 

assets have otherwise expired 

or (ii) the Group has transferred 

substantially all the risks and 

rewards of ownership of the 

assets or (iii) the Group has 

neither transferred nor retained 

substantially all risks and rewards 

of ownership but has not retained 

control. Control is retained if the 

counterparty does not have the 

practical ability to sell the asset 

in its entirety to an unrelated 

third party without needing to 

impose additional restrictions on 

the sale. The Group derecognises 

financial liabilities when, and only 

when, the Group’s obligations 

are discharged, cancelled or they 

expire. The difference between 

the carrying amount of the finan-

cial liability derecognised and the 

consideration paid and payable is 

recognised in profit or loss.

Income taxes. Income taxes 

have been provided for in 

the consolidated financial 

statements in accordance with 

Ukrainian legislation enacted or 

substantively enacted by the end 

of reporting date. The income tax 

charge comprises current tax and 

deferred tax and is recognised in 

the consolidated statement of 

profit or loss unless it relates to 

transactions that are recognised, 

in the same or a different period, 

in other comprehensive income 

or directly in equity.

Current tax is the amount 

expected to be paid to or recov-

ered from the taxation authorities 

in respect of taxable profits or 

losses for the current and prior 

periods. Taxes other than on 

income are recorded within oper-

ating expenses. 

Deferred income tax is provided 

using the balance sheet liability 

method for tax losses carried 

forwards and temporary differ-

ences arising between the tax 

bases of assets and liabilities 

and their carrying amounts for 

financial reporting purposes. In 

accordance with the initial recog-

nition exemption, deferred taxes 

are not recorded for temporary 

differences on initial recogni-

tion of an asset or a liability in a 

transaction other than a business 

combination if the transaction, 

when initially recorded, affects 

neither accounting nor taxable 

profit. Deferred tax liabilities 

are not recorded for temporary 

differences on initial recognition 

of goodwill and subsequently for 

goodwill which is not deductible 

for tax purposes. Deferred tax 

balances are measured at tax 

rates enacted or substantively 

enacted at the reporting date 

which are expected to apply to 

the period when the temporary 

differences will reverse or the tax 

losses carried forwards will be 

utilised. Deferred tax assets and 

liabilities are netted only within 

the individual companies of the 

Group. Deferred tax assets for 

deductible temporary differences 

and tax losses carried forwards are 

recorded only to the extent that 

it is probable that future taxable 

profit will be available against 

which the deductions can be 

utilised.

Inventories. Inventories are 

recorded at the lower of cost and 

net realisable value. The cost of 

inventories includes expenditures 

incurred in acquiring the inven-

tories, production or conversion 

costs and other costs incurred in 

bringing them to their existing 

location and condition. Cost 

of manufactured inventories 

includes an appropriate share of 

production overheads based on 

normal operating capacity. The 

cost of inventories is determined 

on the first in first out basis for 

all inventories except for natural 

gas, oil and petroleum products. 

Weighted average cost formula 

is used for natural gas, oil and 

petroleum products. Net realis-

able value is the estimated selling 

price in the ordinary course of 

business, less the cost of comple-

tion and selling expenses.

Trade accounts receivable. 

Trade and other receivables are 

recognised initially at fair value 

and subsequently measured at 

amortised cost using the effective 

interest method, less provision for 

impairment.

Prepayments made and other 

current assets. Prepayments are 

carried at cost less provision for 

impairment. A prepayment is 

classified as non-current when 

the goods or services relating to 

the prepayment are expected 

to be obtained after one year, or 

when the prepayment relates to 

an asset which will itself be clas-

sified as non-current upon initial 

recognition.

If there is an indication that the 

assets, goods or services relating 

to a prepayment will not be 

received, the Group recognises 

provision for impairment in 

respect of such prepayment 

made and a corresponding 

impairment loss is recognised in 

the consolidated statement of 

profit or loss. 

Promissory notes. Some pur-

chases may be settled by prom-

issory notes or bills of exchange, 

which are negotiable debt 

instruments. Purchases settled by 

promissory notes are recognised 

based on management’s estimate 

of the fair value to be given up in 

such settlements. The fair value 

is determined with reference to 

observable market information.

Cash and cash equivalents. 

Cash and cash equivalents 

include cash on hand, deposits 

held at call with banks, and 

other short-term highly liquid 

investments with original 

maturities of three months or 

less. Cash and cash equivalents 

are carried at amortised cost 

using the effective interest rate 

method.  Restricted balances 

are excluded from cash and 

cash equivalents for the pur-

poses of the statement of cash 

flows.  Balances restricted from 

being exchanged or used to 

settle a liability for the period 

from three to twelve months 

after the reporting date are 

included in other current assets. 

Balances restricted from being 

exchanged or used to settle 

a liability for at least twelve 

months after the reporting date 

are included in other non-cur-

rent assets.

Share capital. Ordinary shares 

are classified as equity. Incre-

mental costs directly attributable 

to the issue of new shares are 

shown in equity as a deduction, 

net of tax, from the proceeds.

Dividends and mandatory 

budget contribution of profit 

share. Dividends and manda-

tory budget contribution of 

profit share are recognised as 

a liability and deducted from 

equity at the reporting date only 

if they are declared before or on 

the reporting date. Dividends 

are disclosed when they are pro-

posed before the reporting date 

or proposed or declared after 

the reporting date but before 

the consolidated financial state-

ments are authorised for issue.

Value added tax (“VAT”). In 

Ukraine VAT is levied at two 

rates: 20% on sales and imports 

of goods, works and services 

within the country, and 0% on 

the export of goods and limited 

list of services (e.g. international 

transportation). A taxpayer’s VAT 

liability equals the total amount 

of VAT accrued within a report-

ing period, and arises on the 

earlier of the date of shipping 

goods or rendering services to a 

customer or the date of receiv-

ing payment from the customer. 

A VAT input is the amount that 

a taxpayer is entitled to offset 

against his VAT liability in a 

reporting period. Rights to VAT 

input arise when a VAT invoice is 

received, which is issued on the 

earlier of the date of payment to 

the supplier or the date goods 

are received or services are ren-

dered. VAT related to sales and 

purchases is recognised in the 

consolidated statement of finan-

cial position on a gross basis and 

disclosed separately as an asset 

and liability. Where provision has 

been made for impairment of 

receivables, the impairment loss 

is recorded for the gross amount 

of the debtor, including VAT, 

except provision for impairment 

of prepayments made.

Borrowings. Borrowings include 

bank borrowings and bonds.

Borrowing costs. Borrowing 

costs directly attributable to 

the acquisition, construction or 

production of qualifying assets, 

which are assets that necessarily 

take a substantial period of time 

to get ready for their intended 

use or sale, are added to the cost 

of those assets, until such time 

as the assets are substantially 

FINANCIAL STATEMENTS

ANNUAL REPORT 2017

265

264

ready for their intended use or 

sale. All other borrowing costs are 

recognised in consolidated profit 

or loss in the period in which they 

are incurred.

Borrowings are initially recognised 

at fair value, net of transaction 

costs incurred. Borrowings are 

subsequently carried at amortised 

cost using the effective interest 

method. Bank overdrafts are 

included into borrowings line 

item in the consolidated state-

ment of financial position.

Trade accounts payable. Trade 

accounts payable are recognised 

and initially measured under the 

policy for financial instruments 

mentioned above. Subsequently, 

instruments with a fixed maturity 

are re-measured at amortised 

cost using the effective interest 

method. Amortised cost is calcu-

lated by taking into account any 

transaction costs and any dis-

count or premium on settlement.

Advances received. Advances 

received are carried at amounts 

originally received excluding VAT. 

Amounts of advances received 

are expected to be realised 

through the revenue received 

from usual activities of the Group.

Provisions. Provisions are rec-

ognised when the Group has 

a present obligation (legal or 

constructive) as a result of a past 

event and it is probable that an 

outflow of resources embody-

ing economic benefits will be 

required to settle the obligation 

and a reliable estimate can be 

made of the amount of the obli-

gation.

Where the Group expects some 

or all of a provision to be reim-

bursed, for example under an 

insurance contract, the reim-

bursement is recognised as a 

separate asset but only when the 

reimbursement is virtually certain.

The expense on any provision is 

presented in the consolidated 

statement of profit or loss net of 

any reimbursement. If the effect 

of time value of money is mate-

rial, provisions are discounted 

using a current pre-tax rate that 

reflects, where appropriate, the 

risks specific to the liability. Where 

discounting is used, the increase 

in provision due to the passage 

of time is recognised as a finance 

cost.

Other liabilities. Other financial 

liabilities are recognised initially at 

fair value, net of transaction costs 

incurred, and are subsequently 

stated at amortised cost using the 

effective interest method. Other 

non-financial liabilities are mea-

sured at cost.

Contingent assets and liabil-

ities. A contingent asset is not 

recognised in the consolidated 

financial statements but disclosed 

when an inflow of economic ben-

efits is probable.

A contingent liability is not 

recognised in the consolidated 

financial statements unless it is 

probable that an outflow of eco-

nomic resources will be required 

to settle the obligation and it can 

be reasonably estimated. Contin-

gent liabilities are disclosed unless 

the possibility of an outflow of 

resources embodying economic 

benefits is remote.

Revenue recognition. Revenue 

is measured at the fair value of 

the consideration received or 

receivable, and are shown net of 

value added tax and discounts. 

Revenue from the sale of goods is 

recognised when the goods are 

delivered and titles have passed, 

at which time all the following 

conditions are satisfied:
•

 

The Group has transferred to 

the buyer the significant risks 

and rewards of ownership of 

the goods;

•

 

The Group retains neither 

continuing managerial 

involvement to the degree 

usually associated with own-

ership nor effective control 

over the goods sold;

•

 

The amount of revenue can 

be measured reliably;

•

 

It is probable that the eco-

nomic benefits associated 

with the transaction will flow 

to the Group; and

•

 

The costs incurred or to be 

incurred in respect of the 

transaction can be measured 

reliably.

If the goods are transported to 

a specified location, revenue is 

recognised when the goods are 

passed to the customer at the 

destination point. 

Revenue from sales of services is 

recognised when:
•

 

The amount of revenue can 

be measured reliably;

•

 

It is probable that the eco-

nomic benefits associated 

with the transaction will flow 

to the Group;

•

 

The stage of completion of 

the transaction at the report-

ing date can be measured 

reliably;

•

 

The costs incurred on the 

transaction and the costs to 

complete the transaction can 

be measured reliably.

Revenue gross versus net 

presentation. When the Group 

acts as a principal, revenue and 

cost of sales are reported on a 

gross basis. If the Group sells 

goods or services as an agent, 

revenue is recorded on a net 

basis, representing the margin/

commission earned. Whether 

the Group is considered 

to be principal or agent in 

a transaction depends on 

analysis of both legal form and 

substance of the agreement the 

Group enters in. 

Recognition of expenses. 

Expenses are recorded on an 

accrual basis. Cost of sales 

comprises the purchase price, 

transportation costs, commissions 

relating to supply agreements 

and other related expenses.

Finance income and costs. 

Finance income and costs com-

prise interest expense on borrow-

ings, losses on early repayment of 

loans, interest income on deposits 

and current accounts, income or 

loss on origination of financial 

instruments, unwinding of inter-

est of the pension obligation and 

provisions.

Interest income is recognised as 

it accrues, taking into account the 

effective yield on the asset.

Sale and repurchase agreements 

and lending of securities. Sale 

and repurchase agreements 

(“repo agreements”) which effec-

tively provide a lender’s return to 

the counterparty are treated as 

secured financing transactions. 

Securities sold under such sale 

and repurchase agreements are 

not derecognised. The securities 

are not reclassified in the con-

solidated statement of financial 

position unless the transferee has 

the right by contract or custom 

to sell or repledge the securities, 

in which case they are reclassified 

as repurchased receivables. The 

corresponding liability is presented 

within amounts due to other 

banks or other borrowed funds.

Employee benefits: Defined Con-

tributions Plan. The Group makes 

statutory unified social contri-

butions to the Pension Fund of 

Ukraine in respect of its employ-

ees. The contributions are calcu-

lated as a percentage of current 

gross salary and are expensed 

when incurred. Discretionary pen-

sions and other post-employment 

benefits are included in labour 

costs in the consolidated state-

ment of profit or loss.

During the year ended 31 Decem-

ber 2017, the Group recognised 

expenses from contributions paid 

to the Pension Fund of Ukraine 

in amount of UAH 1,929 million 

(2016: UAH 1,482 million).

Employee benefits: Defined 

Benefit Plan. The Group provides 

lump sum benefits, payments on 

reaching certain age, and other 

benefits as prescribed by the 

collective agreement. The liability 

recognised in the consolidated 

statement of financial position 

in respect of the defined benefit 

pension plan is the present value 

of the defined benefit obligation 

at the reporting date. The defined 

benefit obligation is calculated 

annually using the projected unit 

credit method.

Present value of the defined ben-

efit obligation is determined by 

discounting the estimated future 

cash outflows using interest rates 

of high-quality corporate bonds 

that are denominated in the cur-

rency in which the benefits will 

be paid, and that have terms to 

maturity approximating the terms 

of the related pension liability.

Actuarial gains and losses 

arising from experience adjust-

ments and changes in actuarial 

assumptions are charged or 

credited to other comprehen-

sive income in the period in 

which they arise. Past service 

costs are recognised immedi-

ately in the consolidated state-

ment of profit or loss.

FINANCIAL STATEMENTS

ANNUAL REPORT 2017

267

266

28� CRITICAL ACCOUNTING 

ESTIMATES AND JUDGEMENTS

In the application of the Group’s 

accounting policies, management 

is required to make judgements, 

estimates and assumptions about 

the carrying amounts of assets 

and liabilities that are not readily 

apparent from other sources. The 

estimates and associated assump-

tions are based on historical expe-

rience and other factors that are 

considered to be relevant. Actual 

results may differ from these esti-

mates.

The estimates and underlying 

assumptions are reviewed on 

an ongoing basis. Revisions to 

accounting estimates are rec-

ognised in the period in which 

the estimate is revised if the 

revision affects only that period, 

or in the period of the revision 

and future periods if the revision 

affects both current and future 

periods.

Critical judgements in applying 

accounting policies. The follow-

ing are the critical judgements, 

apart from those involving esti-

mations, that the Group manage-

ment has made in the process of 

applying the Group’s accounting 

policies and that have the most 

significant effect on the amounts 

recognised in the consolidated 

financial statements.

Investment in “Ukrnafta” PJSC. 

The Group holds 50% + 1 share 

of voting rights in “Ukrnafta” PJSC. 

The rest is owned by limited 

number of investors. In March 

2015, according to changes in 

the Law of Ukraine “On Joint-

Stock Companies”, quorum of the 

General meetings of shareholders 

was lowered from 60%+1 share 

down to 50%+1 share. Following 

those changes and changes 

in the Supervisory Board of 

“Ukrnafta” PJSC in July 2015, the 

Company has regained control 

over “Ukrnafta” PJSC starting from 
22 July 2015. Accordingly, the 
investment in “Ukrnafta” PJSC 
is accounted for as investment 
in subsidiary starting from that 
date. The Company considers this 
change as a business combination 
and applied acquisition method of 
accounting, respectively.

Revenue recognition. In 
accordance with the Code of the 
gas transmission system, starting 
from 1 October 2015 the Group, 
as transmission system operator, 
is responsible for regulating an 
imbalance of the system which 
is calculated as the difference 
between the volumes of natural 
gas entering through the entry 
points and the volumes of natural 
gas exiting through the exit 
points, on the basis of actual data 
received through the allocation 
procedure, in the context of 
transmission service customers.

The Group provides balancing 
services and recognises revenue 
from these operations in accor-
dance with the Code of the gas 
transmission system and terms 
of individual contracts with 
transmission services customers, 
considering that:
•

 

the Code of the gas trans-
mission system provides that 
balancing service is provided 
by the transmission system 
operator based on the data 
on a monthly imbalance and 
does not require transmission 
service customers to confirm 
the provision of services ;

•

 

the price of balancing services 
is determined by the Group 
on the basis of data on 
unadjusted negative balance 
of the customer and base 
price of gas. The base price 
for gas consists of price of 
natural gas procurement, 
transmission and storage 
costs, and other costs, related 
to balancing services that can 
be reliably measured.

Key sources of estimation 

uncertainty. The following are 
the key assumptions concerning 
the future, and other key sources 
of estimation uncertainty at the 
end of the reporting period, that 
have a significant risk of causing 
a material adjustment to the 
carrying amounts of assets and 
liabilities within the next financial 
year.

Employee benefit obligations. 
The Group assesses post-em-
ployment and other employee 
benefit obligations using the 
projected unit credit method 
based on actuarial assumptions 
which represent management’s 
best estimates of the variables 
that will determine the ultimate 
cost of providing post-em-
ployment and other employee 
benefits. The present value of 
the pension obligations depends 
on a number of factors that are 
determined on an actuarial basis 
using a number of assumptions. 
The major assumptions used 
in determining the net cost 
(income) for pensions include 
the discount rate and expected 
salary increases. Any changes in 
these assumptions will impact 
the carrying amount of pension 
obligations. Since there are no 
long-term, high quality corporate 
or government bonds issued in 
Ukrainian hryvnias, significant 
judgement is needed in assess-
ing an appropriate discount rate. 
Key assumptions are presented 
in Note 15.

Deferred tax asset recognition. 
The deferred tax asset, recognised 
in the consolidated statement 
of financial position, represents 
income taxes recoverable through 
future deductions from taxable 
profits. Deferred tax assets are 
recorded to the extent that reali-
sation of the related tax benefit is 
probable. In determining future 
taxable profits and the amount of 
tax benefits that are probable in 

the future, management makes 
judgements and applies estima-
tion based on historic taxable 
profits and expectations of future 
taxable income that are believed 
to be reasonable under the cir-
cumstances.

Tax legislation. Ukrainian tax, 
currency and customs legislation 
continues to evolve. Conflicting 
regulations are subject to varying 
interpretations. Management 
believes its interpretations are 
appropriate and sustainable, but 
no guarantee can be provided 
against a challenge from the tax 
authorities (Note 23).

Decommissioning costs. The 
decommissioning provision rep-
resents the present value of the 
decommissioning costs relating 
to oil and gas properties, which 
are expected to be incurred in 
the future (Note 15). These provi-
sions were recognised, based on 
Group’s internal estimates. 

Main estimates include future 
market prices for the necessary 
decommissioning costs, and are 
based on market conditions and 
factors. Additional uncertainties 
relate to the timing of the decom-
missioning costs, which depends 
on depletion of the fields, future 
oil and gas prices and as a result – 
expected point of time, when 
there are no further economic 
benefits in the production.

Changes in these estimates can 
lead to the material changes in 
the provisions recognised in the 
consolidated statement of finan-
cial position.

Depreciation of the gas transit 

assets and depletion of the oil and 

gas assets. Oil and gas assets are 
depleted using a unit-of-produc-
tion method. The cost of the wells 
is amortised based on the proved 
volumes of available reserves, 
estimated in accordance with the 

standards of the Hydrocarbons 
Resource Management System 
(PRMS) prepared by the Oil and 
Gas Reserves Committee of Soci-
ety of Petroleum Engineers (SPE). 
The estimation of hydrocarbons 
reserves is carried out in general 
on the field. Respectively, all wells 
of the field are depreciated based 
on the total volume of extracted 
from the field specific type of 
hydrocarbons for the period and 
the balances of reserves of such 
hydrocarbons at the beginning 
of the period. Changes in esti-
mates regarding the volumes 
of total proved reserves either 
downward or upward, can result 
in the change of depreciation and 
depletion expenses.

The following events occurred 
during the first quarter of 2017 
that provide higher probability of 
the assumption of no transit flows 
from 1 January 2020, including 
but not limited to: ratifying the 
Intergovernmental agreement 
in respect of “TurkStream” gas 
pipeline project by the State 
Duma of the Russian Federation; 
obtaining permissions for partial 
commissioning of gas pipelines 
within “Nord Stream-2” project. 
As a result, the Group has revised 
useful lives of its transit assets 
planned to for decommissioning 
after 31 December 2019. This 
resulted in higher depreciation 
expense by UAH 16,486 million 
for the year ended 31 Decem-
ber 2017.

Estimation of oil and gas reserves. 
Reserves are the quantities of oil 
and gas which are anticipated to 
be commercially recovered from 
known accumulations from a 
given date forward under defined 
conditions. Proved and proba-
ble reserves used in depletion 
rate calculation are determined 
using estimates of known oil and 
gas reservoirs, recovery factors, 
operating conditions, future oil 
and gas prices and government 

regulations. Latest assessment 
of gas reserves was performed 
as at 30 June 2017, and latest 
assessment of oil reserves was 
performed as at 30 June 2016. 
Reserves estimates involve some 
degree of uncertainty, and their 
estimates are revised as addi-
tional geologic and engineering 
data becomes available or as 
economic conditions change. 
Accordingly, depletion rates and 
discounted cash flows for revalua-
tion and impairment of property, 
plant and equipment may be also 
revised. 

Revaluation and impairment of 

property, plant and equipment. 
Management performs assess-
ment whether carrying amounts 
of property, plant and equipment 
accounted under the revaluation 
model, differ materially from their 
fair values. Such assessment is 
performed on an annual basis, 
and involves analysis of prices, 
price indices, changes in tech-
nology, foreign exchange rates 
and other relevant factors. In case 
such assessment identifies that 
carrying amounts of items of 
property, plant and equipment 
differ materially from their fair val-
ues, management engages inde-
pendent appraisers to perform 
property, plant and equipment 
revaluation.

Latest revaluation of property, 
plant and equipment was made 
by the independent apprais-
ers as at 31 December 2017. 
Key assumptions for revaluation 
are presented in Note 25.

Management also reviews 
carrying amounts of property, 
plant and equipment to 
determine whether there 
are any indicators that these 
assets are impaired. In making 
the assessment for general 
impairment, assets that do not 
generate independent cash flows 
are allocated to an appropriate 

FINANCIAL STATEMENTS

ANNUAL REPORT 2017

269

268

cash-generating unit. Indicators 

of a potential impairment include 

analysis of market conditions, 

asset utilisation and the ability 

to utilise the asset for alternative 

purposes. If an indication of 

impairment exists, the Group 

estimates the recoverable value 

(greater of fair value less cost 

to sell and value in use) and 

compares it to the carrying 

value, and records impairment 

to the extent the carrying value 

is greater than the recoverable 

amount. Management did not 

identify any general indicators of 

impairment as at 31 December 

2017.

Useful lives of other property, 

plant and equipment. The Group’s 

property, plant and equipment, 

except oil and gas assets are 

depreciated using straight-line 

method over their estimated 

useful lives, which are based on 

management’s business plans 

and operational estimates.

The Group reviews the estimated 

useful lives of property, plant and 

equipment at the end of each 

annual reporting period. The 

review is based on the current 

condition of the assets and the 

estimated period during which 

they will continue to bring eco-

nomic benefit to the Group. Any 

change in estimated useful life 

or residual value is recorded on a 

prospective basis from the date of 

the change.

Impairment of trade accounts 

receivable and prepayments 

made. Management estimates 

the likelihood of the collection 

of trade accounts receivable 

based on an analysis of individ-

ual accounts. Factors taken into 

consideration include an age-

ing analysis of trade accounts 

receivable in comparison with 

the payment history, credit 

terms allowed to customers and 

available market information 

regarding the counterparty’s 

ability to pay. Should actual 

collections be less than man-

agement’s estimates, the Group 

would be required to record an 

additional impairment expense.

Inventory valuation. Inventory 

are stated at lower of cost or 

net realisable value. In assess-

ing the net realisable value of 

its inventories, management 

bases its estimates on various 

assumptions including current 

market prices. At each reporting 

date, the Group evaluates its 

inventories for excess quantities 

and obsolescence and, if nec-

essary, records an allowance to 

reduce inventories for obsolete 

and slow-moving goods. This 

allowance requires assumptions 

related to future inventories use. 

These assumptions are based 

on inventories ageing and fore-

casted demand. Any changes in 

the estimates may impact the 

amount of the allowances for 

inventory that may be required. 

29� ADOPTION OF NEW OR 

REVISED STANDARDS AND 

INTERPRETATIONS

Adoption of new and revised 

International Financial Report-

ing Standards

The following standards have been 

adopted by the Group for the first 

time for the financial year begin-

ning on or after 1 January 2016:
•

 

Amendments to IFRS 12 “Dis-

closure of Interests in Other 

Entities”;

•

 

Amendments to IFRS 11 “Joint 

Arrangements” – Accounting 

for acquisition of interest in 

joint arrangements;

•

 

Amendments to IAS 1 

“Presentation of Financial 

Statements”– Initiative as to 

the disclosure of information;

•

 

Amendments to IAS 16 

“Property, Plant and Equip-

ment” and IAS 38 “Intangible 

Assets” – Clarification in 

respect of applying depre-

ciation and amortisation 

formulas;

•

 

IFRS 14 “Regulatory Deferred 

Accounts”;

•

 

Amendments to IAS 27 “Sep-

arate Financial Statements”– 

applying equity method in 

separate financial statements;

•

 

Annual Improvements to 

IFRSs 2012–2014 Cycle.

The adoption of amendments 

to standards did not have any 

effect on the financial position 

or performance reported in 

the consolidated financial 

statements and had not 

resulted in any changes to the 

Group’s accounting policies and 

the amounts reported for the 

current or prior years.

Standards and Interpretations 

in issue, but not yet effective. 

At the date of authorisation of 

these consolidated financial 

statements, the following 

Standards and Interpretations, 

as well as amendments to 

Standards were in issue but not 

yet effective:

Standards/Interpretations

Effective for annual 

accounting period 

beginning on or after

Amendments to IAS 12 “Income Taxes” – Recognition of deferred tax assets for unrealised 
losses

1 January 2017 

Amendments to IAS 7 “Statement of Cash Flows” – Disclosure initiative

1 January 2017 

IFRS 15 “Revenue from Contracts with Customers”

1 January 2018 

IFRS 9 “Financial Instruments”

1 January 2018

Amendments to IFRS 2 “Share-based Payment” – Classification and Measurement of Share-
based Payment Transactions

1 January 2018 

IFRS 16 “Leases”

1 January 2019 

Amendment to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in 
Associates and Joint Ventures” – Sale or contribution of assets between an investor and its 
associate or joint venture

Effective date to be 

determined

IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

1 January 2018 

Amendments to IFRS 4 “Applying IFRS 9 “Financial Instruments” with IFRS 4 „Insurance 
Contracts“

1 January 2018 

Amendments to IAS 40: Transfers of Investment Property

1 January 2018 

Annual Improvements to IFRSs 2014–2016 Cycle

1 January 2018 

Management is currently 

evaluating the impact of the 

adoption of Amendments 

to IAS 1: Disclosure Initiative, 

Amendments to IFRS 10 and 

IAS 28: Sale or Contribution of 

Assets between an Investor 

and its Associate or Joint 

Venture, Amendments to IFRS 

11, Amendments resulting 

from Annual Improvements 

Cycles, IFRS 15 Revenue from 

contracts with customers and 

IFRS 9 Financial Instruments. 

For other Standards and 

Interpretations management 

anticipates that their adoption 

in future periods will not 

have a material effect on 

the consolidated financial 

statements of the Group in 

future periods.

IFRS 9 Financial Instruments

IFRS 9 issued in November 2009 

introduced new requirements 

for the classification and mea-

surement of financial assets. IFRS 

9 was subsequently amended 

in October 2010 to include 

requirements for the classification 

and measurement of financial 

liabilities and for derecogni-

FINANCIAL STATEMENTS

ANNUAL REPORT 2017

271

270

tion, and in November 2013 to 
include the new requirements 
for general hedge accounting. 
Another revised version of IFRS 
9 was issued in July 2014 mainly 
to include a) impairment require-
ments for financial assets and 
b) limited amendments to the 
classification and measurement 
requirements by introducing a ‘fair 
value through other comprehen-
sive income’ (FVTOCI) measure-
ment category for certain simple 
debt instruments.

The key requirements of IFRS 9 are:
•

 

Classification and measure-

ment of financial assets. All 
recognised financial assets 
that are within the scope 
of IFRS 9 are required to be 
subsequently measured at 
amortised cost or fair value. 
Specifically, debt investments 
that are held within a business 
model whose objective is to 
collect the contractual cash 
flows, and that have contrac-
tual cash flows that are solely 
payments of principal and 
interest on the principal out-
standing are generally mea-
sured at amortised cost at the 
end of subsequent account-
ing periods. Debt instruments 
that are held within a business 
model whose objective is 
achieved both by collecting 
contractual cash flows and 
selling financial assets, and 
that have contractual terms 
that give rise on specified 
dates to cash flows that are 
solely payments of principal 
and interest on the principal 
amount outstanding, are gen-
erally measured at FVTOCI. All 
other debt investments and 
equity investments are mea-
sured at their fair value at the 
end of subsequent account-
ing periods. In addition, under 
IFRS 9, entities may make 
an irrevocable election to 
present subsequent changes 
in the fair value of an equity 

investment (that is not held 
for trading nor contingent 
consideration recognised 
by an acquirer in a business 
combination) in other com-
prehensive income, with only 
dividend income generally 
recognised in profit or loss. 

•

 

Classification and mea-

surement of financial 

liabilities. With regard to 
the measurement of finan-
cial liabilities designated as 
at fair value through profit 
or loss, IFRS 9 requires that 
the amount of change in 
the fair value of a financial 
liability that is attributable to 
changes in the credit risk of 
that liability is presented in 
other comprehensive income, 
unless the recognition of such 
changes in other compre-
hensive income would create 
or enlarge an accounting 
mismatch in profit or loss. 
Changes in fair value attrib-
utable to a financial liability’s 
credit risk are not subse-
quently reclassified to profit or 
loss. Under IAS 39, the entire 
amount of the change in 
the fair value of the financial 
liability designated as fair 
value through profit or loss is 
presented in profit or loss.

•

 

Impairment. In relation to 
the impairment of financial 
assets, IFRS 9 requires an 
expected credit loss model, as 
opposed to an incurred credit 
loss model under IAS 39. The 
expected credit loss model 
requires an entity to account 
for expected credit losses and 
changes in those expected 
credit losses at each reporting 
date to reflect changes in 
credit risk since initial recog-
nition. In other words, it is no 
longer necessary for a credit 
event to have occurred before 
credit losses are recognised.

•

 

Hedge accounting. The new 
general hedge accounting 

requirements retain the three 
types of hedge accounting 
mechanisms currently avail-
able in IAS 39. Under IFRS 9, 
greater flexibility has been 
introduced to the types 
of transactions eligible for 
hedge accounting, specifi-
cally broadening the types of 
instruments that qualify for 
hedging instruments and the 
types of risk components of 
non-financial items that are 
eligible for hedge accounting. 
In addition, the effectiveness 
test has been overhauled and 
replaced with the principle 
of an ‘economic relationship’. 
Retrospective assessment of 
hedge effectiveness is also 
no longer required. Enhanced 
disclosure requirements 
about an entity’s risk manage-
ment activities have also been 
introduced.

Based on an analysis of the 
Group’s financial assets and finan-
cial liabilities as at 31 December 
2017 based on the facts and 
circumstances that exist at that 
date, the management of the 
Group considers that they have 
low credit risk given that 99% of 
the Company’s cash and cash 
equivalents are placed in the 
state-owned banks.

Classification and measurement

All financial assets and financial 
liabilities will continue to be 
measured on the same basis 
as is currently adopted under 
IAS 39. Based on its assessment, 
the Group believe that the new 
classification requirements will 
not have a material impact on its 
accounting for financial assets 
and financial liabilities.

Impairment 

The Group expects to apply the 
simplified approach to recognise 
lifetime expected credit losses for 

its trade and other receivables, as 
permitted by IFRS 9. In relation to 
the cash and cash equivalents, the 
management of the Group con-
siders that they have low credit 
risk given their strong external 
credit rating and hence expect 
to recognise 12-month expected 
credit losses for these items.

In general, the management 
anticipates that the application of 
the expected credit loss model of 
IFRS 9 would not have significant 
impact on the amount of loss 
allowance recognised for financial 
assets.

This assessment is based on 
currently available information 
and may be subject to changes 
arising from further reasonable 
and supportable information 
being made available to the 
Group in 2018 when the Group 
will adopt IFRS 9. 

The Group does not apply hedge 
accounting under IAS 39 and 
does not intend to apply it under 
IFRS 9.

IFRS 15 Revenue from 

Contracts with Customers
IFRS 15 establishes a single 
comprehensive model for entities 
to use in accounting for revenue 
arising from contracts with 

customers. IFRS 15 will supersede 
the current revenue recognition 
guidance including IAS 
18 Revenue, IAS 11 Construction 

Contracts and the related 
Interpretations when it becomes 
effective. 

The core principle of IFRS 15 is 
that an entity should recognise 
revenue to depict the transfer 
of promised goods or services 
to customers in an amount that 
reflects the consideration to 
which the entity expects to be 
entitled in exchange for those 
goods or services. Specifically, 
the Standard introduces a 
5-step approach to revenue 
recognition:
•

 

Identify the contract with the 
customer;

•

 

Identify the performance obli-
gations in the contract;

•

 

Determine the transaction 
price;

•

 

Allocate the transaction price 
to the performance obliga-
tions in the contracts;

•

 

Recognise revenue when (or 
as) the entity satisfies a perfor-
mance obligation.

Under IFRS 15, an entity 
recognises revenue when or 
as a performance obligation is 
satisfied, i.e. when ‘control’ of the 
goods or services underlying 

the particular performance 
obligation is transferred to the 
customer. Far more prescriptive 
guidance has been added in 
IFRS 15 to deal with specific 
scenarios. Furthermore, extensive 
disclosures are required by IFRS 
15. 

In April 2016, the IASB issued Clar-

ifications to IFRS 15 in relation to 
the identification of performance 
obligations, principal versus agent 
considerations, as well as licens-
ing application guidance. 

The standard permits either a 
full retrospective or a modified 
retrospective approach for the 
adoption. 

Based on five-step model 
defined by IFRS 15 the Group 
performs a review to understand 
how IFRS 15 applies to the 
Group’s business. The Group’s 
management is currently 
completing to estimate the effect 
of IFRS 15 on its accounting for 
balancing services. Except for 
this issue and providing more 
extensive disclosures on the 
Group’s revenue transactions, the 
management does not anticipate 
that the application of IFRS 15 
will have a significant impact 
on the financial position and/
or financial performance of the 
Group.

ADDITIONAL INFORMATION

ANNUAL REPORT 2017

273

272

DETERMINING REPORT CONTENT 

AND SIGNIFICANT ASPECTS

During the preparation of this annual report, Naftogaz uses the world's best practices in the area of non-

financial and corporate reporting. Naftogaz is guided by the following GRI Standard principles for deter-

mining the content of the report:

•  Interaction with stakeholders;
•  Sustainable development context;

•  Significance
•  Completeness.

Detailed information on each principle is provided further.

Continuous interaction with stakeholders is a necessary condition for the company's sustainable 

development and successful business operation. The company holds a continuous dialogue with 13 

main groups of stakeholders represented below:
•  shareholders and investors;
•  company's employees;
•  trade unions;
•  government authorities;
•  regulatory bodies;
•  local self-government bodies;
•  mass media;

•  financial and credit institutions;
•  partner organizations;
•  contractors, suppliers;
•  consumers;
•  local communities, public and charitable

organizations;

•  scientific and educational establishments.

The company uses different methods and forms of interaction with stakeholders including: meetings, forums, 

conferences, sessions, open doors days, correspondence, different inquiries, etc. 

INTERACTION WITH STAKEHOLDERS

  NAK Naftogaz of Ukraine stakeholders map and the main methods of interaction with them

Stakeholders

Area of interest/ stake in

Forms of interaction

Interaction tools

Shareholders 
and investors

the company's sustainable development; 
profitable operations; 
Improvement of performance 
indicators;
transparency of operations and reporting;
the company's positive image

regular information 
sharing;
dialogue

annual report;
financial reports;
reviews;
negotiations;
consultations;

Company 
employees

the company's positive image; 
the company's sustainable 
development; 
improvement of labor conditions; 
personal development; 
social guarantees and benefits

dialogue;
regular information 
sharing;
identification of opinions 
and interests

collective agreement; 
corporate ethics code;
community liaison office;
corporate site;
electronic networks;
correspondence/responding to inquiries
interrogation/questioning;
training

Stakeholders

Area of interest/ stake in

Forms of interaction

Interaction tools

Trade unions

fulfillment of the collective agreement;
protection of interests of the trade 
union members

dialogue;
regular information 
sharing;
joint activities

collective agreement;
trade union conferences;
labor dispute commission; 
commission on labor issues;
campaigns

Government 
authorities  

Sustainable development of the 
industry and the country;
compliance with the law;
approval of projects

regular information 
sharing;
dialogue;
joint activities; 
participation in events 
organized by stakeholders

The Company's Supervisory Board;
meetings; 
sessions;
conferences;
reports;
correspondence 

Regulatory 
bodies

compliance with the law;
monitoring of operations;
permits and approvals

regular information 
sharing

reviews;
reports;
correspondence

Local self-
government 
bodies

implementation of social programs;
provision of work places;
provision of energy resources;
tariffs for energy supplies;
land allotment issues;
cushioning the impact of the company's 
operations on the environment

regular information 
sharing;
dialogue;
joint activities

correspondence;
projects; 
campaigns

Mass media

transparency of operations;
openness and accessibility of information;
Interrelations with the government 
authorities, self-government bodies and 
the public 

regular information 
sharing;
dialogue

press releases; 
press conferences; 
interview; 
newsletters; 
reports

Financial 
and credit 
institutions  

fulfillment of contractual obligations;
return of loans

dialogue;
joint activities

negotiations;
agreements;
memoranda;
financial transactions

Partner 
organizations

mutually beneficial cooperation;
fulfillment of obligations;
the company's positive image

dialogue;
joint activities

corporate site;
financial reports;
business meetings;
negotiations;
consultations;
projects;
campaigns

Contractors, 
suppliers 

fulfillment of obligations;
timely and reliable supplies;
quality of goods (services)

dialogue;
Identification of opinions 
and interests

tender procedures;
agreements;
work and services acceptance acts;
interrogation;
correspondence

Consumers

quality and safety of goods and 
services;
provision of energy recourses;
sustainable heat supply;
tariffs for energy supplies

dialogue;
identification of opinions 
and interests;
participation in 
events organized by 
stakeholders

corporate site; 
conferences;
meetings; 
interrogation/questioning;
forums;
exhibitions
publications in the mass media;
advertising campaigns;

Local 
communities, 
public and 
charitable 
organizations 

cushioning of the impact of goods and 
services on the environment;
partnership for the implementation of 
joint projects

regular information 
sharing;
dialogue;
participation in events 
organized by stakeholders

consultations;
public hearings;
sessions;
round tables;
campaigns;
social and charitable programs

ADDITIONAL INFORMATION

ANNUAL REPORT 2017

275

274

Stakeholders

Area of interest/ stake in

Forms of interaction

Interaction tools

Scientific and 
educational 
establishments 

sustainable scientific and technical 
development;
enhancing the level of education 

dialogue;
joint activities;
participation in the 
events organized by the 
stakeholders

memoranda;
agreements;
projects;
scientific and research work;
conferences;
round tables;
workshops; 
exhibitions;
training courses;
education

The company has a Procedure for Interaction with the Stakeholders in place, which applies to all types of 

the company's activities and is used for the identification of opinions and feedback from different stake-

holder groups.

Addresses and inquiries of the stakeholders in 2017  

  Addresses of the citizens

Main issues raised in addresses:

On disconnection of gas supply

On provision of material aid

On abuses by management

On installing meters

On employment

On gasification

On provision of energy utilities

On settlements

On gas connection

On payment for utilities

On rational proposals

On restructuring of liability

On benefits

On social protection

On fuel price

On liability on salary

Other

28

28

10

9

8

5

5

4

4

3

3

1

3

1

2

165

31

%

10�00

9�03

9�03

3�23

2�90

2�58

1�61

1�61

1�29

1�29

0�97

0�97

0�97

0�65

0�32

0�32

53�23

 

Total number 

 of registered addresses

310

  Information inquiries

Main issues :

10

10

8

7

7

6

5

5

4

3

3

11

2

%

12,35

12,35

9,88

8,64

8�64

7�41

6�17

6�17

4�94

3�70

3�70

2�47

13�58

 

Total number  

of registered inquiries

81

Sustainable development 

context

The "sustainable development context" 

principle provides for highlighting in the 

company's report its performance results and 

impact in a broad sustainable development 

context.

For the purpose of compliance with this 

principle, the company discloses information 

in its annual report on current and potential 

Naftogaz group operations impact on economic, 

ecological and social sustainable development 

at the local, regional, national and international 

levels. When presenting the performance results, 

the company intends to present the scope of 

impact and contribution to different aspects of 

sustainable development. 

Compliance with this principle is very 

important for Naftogaz, particularly due to 

the fact that the company is engaged in 

integration into the European energy market.

On conclusion of agreements, signing natural gas 

acceptance acts, allocation of limits

On provision of documents

On PJSC Zaporizhgaz

On gas price

On consumption volumes

On settlements

On energy utilities

On amounts of debt

On the NAK supervisory board

On write-off of debt

On NAK management income

On installing meters

Other

   Addresses and inquiries from the People's Deputies 

of Ukraine (MPs)

In 2017 the company received:

130

  

addresses from the People's Deputies of Ukraine 

35

 

Inquiries from the People's Deputies of Ukraine

  Key inquirers

81

29

31
16

5

TOTAL

NGOs

Individuals

Media

Other