DTEK's Production Indicators for 1 quarter 2018

In 1 Quarter, 2018, DTEK Group's enterprises extracted 6.4 million tonnes of coal (-23.6% compared to 1Q 2017), supplied 10.2 billion kWh of electricity (+0.8%), transmitted 12.0 billion kWh of electricity over power lines (-0.2%), extracted 397.9 million cubic meters of natural gas (-4.7%).

“2018 will be a breakthrough year for us in terms of transformation,” says DTEK CEO Maxim Timchenko when commenting on the company’s performance in the first quarter of 2018. “We plan to allocate over UAH 17 bln for development of our operations, which is 64% up compared with the 2017 investment plan. We are scaling up our investment in green energy projects; the installed capacity of our wind and solar power plants will exceed 1,000 MW in the nearest years. Yet, in Ukraine’s energy balance, the share of coal-fired generation will still remain high. That is why it is so important to consistently decrease the share of imports in the national fuel consumption. With this objective in mind, we plan to further increase output of G grade coal and convert the generating units from anthracite to high volatile steam coal grades. DTEK already produces 75% of its electricity from these coals. It is an important step towards strengthening Ukraine’s energy security.”

Key Production Indicators of DTEK Group*

*Since March 2017, indicators of the assets located on the temporarily occupied territory of Donetsk and Luhansk regions have not been consolidated in the statements of DTEK Energy & DTEK Group as the company has no control over the assets.

**Since 1 September 2016, DTEK Energy has not consolidated the indicators of Mine Office Obukhovskaya into its statements as its management has been transferred to the DTEK Strategic Holding company. This transaction was carried out as part of the DTEK Energy’s loan portfolio restructuring aimed at balancing the possibilities of the development of enterprises and servicing of loans.

**Including trading operations outside Ukraine.

DTEK Energy

Coal Production and Preparation

5.8 mln tonnes of coal was extracted in the company’s Ukrainian mines in January to March 2018, which is 25.7% or 2.0 mln tonnes less than in 1Q 2017. Mine coal preparation volume in owned and external coal-preparation plants amounted to 4.0 mln tonnes, coal concentrate production – 2.4 mln tonnes.

Main factors that have affected the performance indicators:

• preservation of the previous year extraction level of gas coals by DTEK Pavlogradugol, DTEK Dobropolyeugol and Mine Bilozerska ALC at 5,758.9 ths tonnes;
• cessation of anthracite coal extraction as a result of cessation of control over companies situated in the temporarily occupied territory: DTEK Sverdlovanthracite LLC, DTEK Rovenkyanthracite LLC, DTEK Komsomolets Donbassa JSC, Moslinskoye UPP LLC. The control over them ceased in March 2017.

Key projects being realized in the period:

• a project for construction of a ventilation hole in Yuvileina Mine is going on, which is planned to be commissioned in 2018;
• preparation of the second stage of a project for main ventilators replacement in Dniprovska Mine in order to ensure stable ventilation in the mine;
• renovation of extraction and stoping equipment as well as of mine transport in order to maintain coal production efficiency. 5 roadheaders and 3 cutter-loaders were supplied to DTEK Pavlogradugol mines and 10 electric locomotives were modernized during the period under review.

Electricity generation

Company’s thermal power plants supplied 9.9 billion kWh to the United Energy System of Ukraine in 1Q 2018, which is 44.9 mln kWh more than in 1Q 2017.

Main factors that have affected the performance indicators:

• a drop in electric power production by nuclear power plants by 7.6%, or 1.8 billion kWh. No emergency state was introduced in Ukraine in the energy supply field, which let to expand repair periods of nuclear power-generating units;
• increase of power production by hydro- and pumped-storage power plants by 27% or 858 mln kWh due to water abundance in rivers;
• an increase in electric power production by DTEK Dniproenergo and DTEK Zakhidenergo by 9.8%, or 596.6 mln kWh.
• a drop in in electric power production by DTEK Skhidenergo by 22.4% or 581.4 mln kWh, due to loss of control over Zuivska TPP.

The company is implementing a program for increase of G-grade coal utilization in energy production in order to compensate for cessation of anthracite production in Ukraine. Gas grade coal fired TPP units of DTEK Energy have increased their electric power production by 30.2%, or 1,746.0 mln kWh in the period under review. Their total production in 1Q 2018 amounted to 7.5 billion kWh.

Key projects being realized in the period:

• the reconstruction of Unit #10 at Burshtynska TPP was completed. Its boiler was replaced in the way that the old drum preserved its integrity during its dismounting, which had never been done before in Ukraine. In addition, a full scale automated control system of the power-generating unit was installed. The reconstruction has enabled to increase power unit output by 15 MW up to 210 MW and to increase equipment service life by 15 years;
• reconstruction of automatic frequency and output adjustment system was carried out in 11 DTEK Energy TPP power-generating units, which will ensure frequency maintenance according to ENTSO-E standards;
• DTEK Ladyzhynska TPP is carrying out a project on construction of a solar power station on the dam of Ladyzhynska HPP accompanying the TPP. A proposition to increase SPP output up to 1.5 MW is under investigation;
• preparation for modernization of power-generating units #9, #10 of DTEK Prydniprovska TPP was started in order to ensure safe combustion of G-grade coal instead of A-grade coal. This project includes also installation of new gas-purifying equipment in the Unit #10.

Since 2012, during modernization of any Company’s power unit, its electrostatic precipitators are upgraded so as to achieve dust emission levels required by Directive 2001/80/EC.

Commercial Activity

Coal supply on external and domestic market

Deliveries of coal products under foreign economic contracts are carried out from the resource  of Mine Office Obukhovskaya. 1Q 2018 export volume amounted to 89 ths tonnes, which is 64.8% lower than in 1Q 2017. This decrease is caused by redirection of anthracite to the Ukrainian market due to cessation of its extraction in Ukraine. The enterprise supplied 332 ths tonnes of coal product, which was mainly sent to DTEK Luhanska TPP.

Coal for TPPs and industry customers is also imported from USA and RSA. The import volume in 1Q 2018 amounted to 932.4 ths tonnes and is five times higher than in 1Q 2017.

The company supplied 240 ths tonnes of coal in 1Q to industrial consumers from its own and imported resources.

Electricity supply on external markets

Electric energy export increased by 17.4% and reached 1.5 billion kWh. It is exported to Hungary, Poland and Moldova.

Electricity supply on domestic market

The total realization of natural gas in the Ukraine domestic market amounted 461 mln m³. The electricity is exported from own DTEK Group resources and from resources of other Ukrainian companies.

DTEK Grids: energy transmission

Transmission volume in 1Q 2018 amounted to 12 billion kWh, which is at the same level as in 1Q 2017.

Main factors that have affected the performance indicators:

• increase in electric power consumption in Ukraine (gross) by 4.4%, or 1.8 billion kWh. Recovery of economic activity provided increase of industry demand for electricity by 5.2% or 664.2 mln kWh. Demand of household and public utility customers also increased by 2.2% or 321.7 mln kWh, which was caused by abnormally cold weather in March;
• increase of electric power transmission by DTEK Dniprooblenergo and Kyivenergo by 5.3%, or 449.4 mln kWh;
• decrease of electric power transmission by DTEK Donetskoblenergo, DTEK Power Grid LLC, and DTEK Energougol ENE by 13.5% or 468.2 mln kWh due to decrease of the number of consumers. Since March 2017, the company has no longer been in control of the grids of DTEK Energougol ENE, DTEK Power Grid LLC, and DTEK Donetskoblenergo JSC located in the temporarily occupied territory of Donetsk and Luhansk regions.

Key projects being realized in the period:

• DTEK Dniprooblenergo: An upgraded Customer Service Center was opened in Dnipro. The center provides a whole range of basic services: from reconciliation of power meter readings to issuance of technical specifications for connections to the grid.
• The first stage of construction of 150/10/6 kV Naddniprianska substation has been completed in Dnipro. The substation will provide additional capacities for connecting new consumers and improve reliability of power supply to the existing and planned substations powering the subway. The project includes replacement of an obsolete overhead line system by a high-voltage cable made of cross-linked polyethylene;
• Kyivenergo: technical modernization of 35/10 kV Garnizonna substation powering a Kyiv city airport (Zhuliany) is completed. A modern automated control system is installed in the substation. It enables online collection, storage and retrieval of information about equipment condition and parameters of electrical connections. In addition to this, relay protection, logic and control systems are now realized on modern, freely programmable controllers;
• Reconstruction of 110/10 kV Center substation responsible for stable and high quality powering of Kyiv central districts is coming to completion. Two power transformers, 63 MVA each, have been installed during the reconstruction, which enabled a 40MVA power reserve;
• Construction of 110 kV Arkada substation has started. The project is aimed at stable and reliable power supply to residential districts and creation of capacities for connection of new consumers.

DTEK RENEWABLES

The company supplied 206.2 mln kWh of green energy to the United Energy System of Ukraine in 1Q 2018. This is higher than in the previous year by 18.7%, or 32.5 mln kWh.

Main factors that have affected the performance indicators:

• increase of power production by Botievo Wind Farm by 17.8% or 30.8 mln kWh up to 204.6 mln kWh due to increased wind speed on the site. The availability factors of the wind turbines and the plant infrastructure remain sustainably high: 99.40% and 99.97%, respectively.
• Trifanovska solar power station, put into operation in August 2017, produced 1.7 mln kWh in the period under review. The availability factor of the SPP equipment amounted to 99.96%.

Key projects being realized in the period:

• the first stage of Primorsk wind farm in Zaporizhzhia Region continues to be constructed. Installation sites, driveways, and foundations for wind electricity-generating units are being created. A supply by GE (General Electric) of 26 wind turbines, 3.8 MW each, is expected in this year;
• a project for construction of 200 MW Nikopol SPP in Dnipropetrovsk Region is being prepared for realization. The project will be realized with participation of China Machinery Engineering Corporation (CMEC), which was in April contracted for designing and construction of the SPP. Construction of Nikopol SPP is planned to be completed in 2018;
• development of new wind and solar power projects. The DTEK target project portfolio amounts to 1,000 MW and is planned for realization in the next years.

DTEK Oil&Gas LLC

In January to March 2018, Naftogazvydobuvannya JSC has extracted 397.9 mln  cubic meters of natural gas and 12.7 ths tonnes of gas condensate. This is 19.7 mln cubic meters and 1.6 ths tonnes less than in 1Q 2017 due to scheduled maintenance works.

Main factors that have affected the performance indicators:

• starting of operation of the 5600 meter deep well #34 in Semyrenkivske gas condensate field;
• completion of capital repairs of wells #8 and #70 in Semyrenkivske gas condensate field;
• implementation of measures aimed at intensifying production rates on the existing well stock.

Key projects being realized in the period:

• drilling continuation of the well #25 with the 5,714 meter design depth in Semyrenkivske gas condensate field;
• starting of drilling of the well #43 with the 6,200 meter design depth in Semyrenkivske gas condensate field;
• construction of a propane refrigeration unit at Olefirivka PGPT.