DTEK Zakhidenerho : 26/07 DTEK DTEK's Production Indicators for the First 6 Months of 2018

In January through June, 2018, DTEK Group's enterprises extracted 12.9 million tonnes of coal (-12.9% compared to the first six months of 2017), supplied 17.8 billion kWh of electric power (+3.9%), transmitted 22.1 billion kWh of electric power over power lines (+1.5%), extracted 818.2 billion cubic metres of natural gas (-1.9%).

"Ukraine is in real need for changes and innovations," says DTEK CEO Maxim Timchenko commenting on the company's performance in the first six months of 2018. "They are vital for new sectors to develop and in general for the economy to modernize quicker. The reforms will create conditions required for a wide deployment of advanced technologies in the energy sector. In a competitive electricity market, all companies will be focused on operational efficiency improvement. The reform will give the main benefits to consumers: the right to select their energy suppliers and a real possibility to influence quality. Of course, the gap between the European energy industry and the Ukrainian one is obvious. For us it means the necessity to mobilize our resources to cover the gap as promptly as possible. Already today, DTEK offers its clients new services: on-line access to the electric grid maps, 'digital substation' technology, and Smart Grid elements. We wish to see a swift arrival of western technologies and innovative client solutions to Ukraine."

Key Performance Indicators of DTEK Group

Indicators	UoM	6 months of 2018	6 months of 2017	Change,(+/-)	Change,(%)
Coal production	thous. tonnes	12,889.4	14,806.9	-1,917.5	-12.9
Including
- Grade G, DG (Ukraine)	thous. tonnes	11,426.3	11,568.1	-141.8	-1.2
- Grade A, T (Ukraine)	thous. tonnes	0	1,879.2	-1,879.2	-100
- Grade A (Mine Office Obukhovskaya JSC)**	thous. tonnes	1,463.1	1,359.6	+103.5	+7.6
Coal concentrate production	thous. tonnes	5,805.7	7,519.3	-1,713.6	-22.8
Including
- External ore mills (Ukraine)	thous. tonnes	486.5	878.8	-392.3	-44.6
- Mine Office Obukhovskaya JSC**	thous. tonnes	907.9	856.4	-51.5	-6.0
Electric power generation (supply)*	mln kWh	17,792.6	17,120.2	+672.4	+3.9
- DTEK RENEWABLES	mln kWh	337.8	283.9	+53.9	+18.9
Electric power transmission over power lines*	mln kWh	22,123.4	21,792.4	+331	+1.5
Electric power export	mln kWh	3,005.3	3,059.0	-53.7	-1.8
Coal export***	thous. tonnes	206.0	456.0	-250.0	-54.8
Coal imports	thous. tonnes	1,492.4	654.7	+837.7	+128.0
Natural gas trading	mln cubic metres	944.0	930.0	+14.0	+2.0
Natural gas production	mln cubic metres	818.2	834.6	-16.4	-1.9
Gas condensate production	thous. tonnes	25.2	28.3	-3.1	-10.9

* 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 September 1, 2016, DTEK Energy has not been consolidating the indicators of Mine Office Obukhovskaya JSC into its statements as the Company's management has been transferred to DTEK B.V. Strategic Holding Company. This transaction has been carried out as part of the restructuring of DTEK Energy's loan portfolio aimed at balancing the asset development capacity with the loan servicing capabilities.

*** Including trading operations outside Ukraine.

DTEK Energy

Coal Production and Preparation

DTEK Energy's miners have produced 11.4 million tonnes of coal over the first half of 2018, which is 15%, or 2,021.0 thousand tonnes, more than over the same period the year before.

The total amount of ROM coal dressed has reached 8,086.3 thousand tonnes, of which 907.3 thousand tonnes have been provided by external mills. The concentrate production over the reporting period has reached 4,897.8 thousand tonnes, including 486.5 thousand tonnes provided by external mills.

Main factors that have affected the performance indicators:

• The amount of gas coal grades extraction in the first half of year. It is virtually same as in the first half of the previous year - 11.4 million tonnes. Execution of clearing operations are undermined by rough geological conditions and state of mining openings re-used for cargo deliveries. Disregard that, DTEK Pavlogradugol maintains high performance rates - 108.7 tonnes monthly for one man.
• Cease of anthracite coal grades production. The extraction amounts for the same period of the previous year had been 1,879.2 million tonnes.

Key projects being implemented over the period:

• Yuvileina Mine: the ventilation well is under construction, its operation in 'cargo' mode is expected in Q4 2018. The construction of charging shed, emergency equipment storage, wagon unloading station, and sludge tank is underway. The project will allow to significantly cut the time for deliveries of cargo and materials to operations sites.
• Dniprovska Mine: the project's second stage aimed for replacement of the main ventilation fans has been commenced. In 2018, it is planned to construct an additional ventilation shaft and an airlock, and to purchase ventilation and fire-fighting equipment. The project is being implemented to ensure stable ventilation of mine workings.
• Clearing and tunnelling machinery stock renewal: 6 road-headers and 6 cutter-loaders have been supplied to DTEK Pavlogradugol mines, and 10 electric locomotives have been upgraded. Also, 2 more road-headers have been supplied to DTEK Dobropolyeugol. The upgrade of the mining machinery is aimed to ensure stable operations at mines.
• DTEK Dobropil's'ka CEP: rock disposal dump construction. The project includes bunding of each tier of the dump with clay and construction of an internal drainage system to prevent underground water contamination, as well as provision of a fire-protection layer. These measures are expected to reduce the environmental footprint by preventing coal‑dressing waste contact with the environment and development of fire sources, while water will be diverted to the pond and then returned to production. The operations are expected to be complete in the beginning of 2019.

Electric power generation

For the reporting period, DTEK Energy's power plants have supplied 17.5 billion kWh to the United Energy System of Ukraine. Compared to the same period of the previous year, the increase is 3.7%, or 618.6 million kWh.

Main factors that have affected the performance indicators:

• The increase in power generation by DTEK Dniproenergo, DTEK Zakhidenergo, and Kyivenergo is 9.9%, or 1,212.5 billion kWh.
• A drop in electric power production by DTEK Skhidenergo is 14.4%, or 640.9 mln kWh, due to loss of control over Zuivska TPP. But not accounting for the Zuivska TPP factor, the Company has increased the generation by 2.6%, or 96.3 million kWh.

The Company is implementing a program for increase of G-grade coal utilisation in the energy sector in order to compensate lack of anthracite which is not producing in the territory under Ukraine`s control. DTEK Energy's TPP power units fired with gas coal grades have increased the power generation by 15.3%, or 1,800.8 million kWh - reaching 13.6 billion kWh. This has allowed to cut the share of power generated from anthracite to 12.5% in the Company's net power production.

Key projects being implemented over the period:

• Power unit No. 10 of DTEK Burshtyns`ka TPP: the SACI certificate of compliance of the works completed with the declared retrofit project has been obtained. In course of the retrofitting the installed capacity increase by 15 MW, up to 210 MW, has been achieved; the service life has been extended by 15 years; and the full-scale automated power unit control system has been deployed.
• Power units No 9 and 10 of DTEK Prydniprovska TPP: the projects on transferring from anthracite to G-grade coal firing are being implemented. The project documentation has been already developed, the expert analysis has been performed, contracts for supply of the major thermal-mechanical and draught equipment, as well as APCS. At both power units, preparations of construction sites are being carried out - the operations on old equipment dismantling have been started. Besides, this project includes also installation of new gas-purifying equipment in power unit No. 10. The operations on dismantling of scrubbers and fabrication of the new electrostatic filter are also underway.
• Boiler No. 9 of DTEK Myronivska TPP: the project of replacement of anthracite with gas coal has been commenced. The project is expected to be completed in August.

Since 2012, all Company's power units undergoing retrofitting are also upgraded with electrostatic precipitators to comply with dust emission levels required by Directive 2001/80/EC.

Commercial Activity

Coal supplies

All the export operations are performed by the Company from the resources of Mine Office Obukhovskaya. For the reporting period, 206 thousand tonnes of coal have been supplied to the external markets, which is 54.8% lower than over the same period of the previous year. The decrease is due to the fact that a major part of the coal resource has been being sent to the Ukrainian market to cope with the anthracite deficit that arose in connection with the cessation of production of this coal grade. Ukrainian consumers have been supplied with 721 thousand tonnes of anthracite, which exceeds the indicator for January through June, 2017, by 53.7%.

In general, for DTEK Energy's thermal generation needs 1.5 million tonnes of coal have been imported, which exceeds the indicator for the same period of the previous year by 2.3 times. There also have been supplies from the USA and SAR.

The coal supplies to Ukraine's industrial consumers have reduced by 25.7% amounting to 728 thousand tonnes.

Electric power supplies

3 billion kWh have been supplied over the reporting period by the foreign contracts, which correlates with the levels of the same period of the previous year. The power has been being exported to Hungary, Moldova, and Poland.

Import and supply of natural gas on the domestic market

The total sales volume of natural gas in Ukraine's domestic market have increased by 2% over the first half of 2018 amounting to 944.0 million cubic metres. The increase of trading operations has been caused by the increase of sales to the metallurgic sector enterprises. The trading has been based on the Ukrainian resource.

DTEK Grids

Over January through June, 2018, the power transmission has increased by 1.5%, or 331.0 million kWh, compared to the previous year amounting to 22.1 billion kWh.

Main factors that have affected the performance indicators:

• Increase of power transmission by DTEK Dnipro Grids, DTEK Kyiv Grids, and DTEK Power Grid by 4.0%, or 779.8 million kWh, due to increase in demand from large industrial consumers, small business and population.
• Decline of power transmission by DTEK Donetsk Grids and DTEK Energougol ENE, PJSC have by 19.4%, or 448.8 million kWh.

Since March 2017, the company has no longer been in control of the grids of DTEK Energougol ENE, PJSC, DTEK Power Grid LLC and PJSC "DTEK Donetskoblenergo" located in the areas of Donetsk region temporarily not controlled by the Ukrainian government.

According to the Law "On the Electricity Market", the companies shall separate distribution system operators from electric power production, transmission and supply operations by establishing the corresponding business entities. These changes are an integral part of the energy reform, which is aimed at transition to the electric power market by the European model. DTEK Group makes relevant changes to its activities. DTEK Kyivenergo, DTEK Dniprooblenergo, and DTEK Donetskoblenergo have performed the separation of operations. The power distribution and electric grids operation functions shall be further performed by DTEK Kyiv Grids, DTEK Dnipro Grids, and DTEK Donetsk Grids, respectively. The supply of electric power to consumers in Kyiv, Dnipro Region and Donetsk Region shall be provided by Kyiv Energy Services, Dnipro Energy Services, and Donetsk Energy Services, respectively. It is expected to complete the transition to the new distribution business model by the end of 2018.

Key projects being implemented over the period:

• DTEK Donetsk Grids: the renewed Customer Service Centre operating as a 'single window' has been opened in Pokrovsk. For residents of Pokrovsk, Myrnohrad, and Rodynske, the Centre provides the complete package of services: from meter readings verification to contracts signing.
• The retrofitting of the 35 kV Selidovo substation has been started to ensure stable power supply of the town and adjacent settlements, as well as to secure redundant capacities for connection of new subscribers.
• DTEK Dnipro Grids: the pilot project on helicopter inspections of transmission lines has been commenced. A helicopter is equipped with a thermal imager, video camera, and scanner. This will allow to build an actual picture of lines state and invoke preventive repairs at points that are going to fail, thus increasing the power supply quality.
• In Dnipro, the 150/10/6 kV Naddniprianska substation construction is still in process and is planned to be finished in the end of 2018. The substation will provide additional capacities for connecting of new consumers and improve reliability of power supply to the existing and planned substations powering the subway.
• DTEK Kyiv Grids: the online map of electric grids has been launched.The GIS in open access reflects the locations, voltage levels, and span of overhead transmission lines, as well as the addresses and designations of transformer substations, and capacities of distribution substations. This allows to estimate distance from a land lot to the closest point of connection to the grid and evaluate the connection cost. The project has been implemented in cooperation with the Ministry of Economic Development and Trade of Ukraine and the Better Regulation Delivery Office.
• Reconstruction of the 110/10 kV Centre substation responsible for stable and high quality powering of Kyiv central districts has been completed. Two power transformers, 63 MVA each, have been installed during the reconstruction, which enabled a 40 MVA power reserve.
• Construction of 110 kV Arkada substation is in process. The project is aimed at stable and reliable power supply to residential districts and creation of capacities for connection of new consumers.
• DTEK Power Grid: the retrofitting of the 110 kV Vuhledar substantion has been commenced aimed to ensure stable and reliable power supply of the town and power transit over this substation.

DTEK RENEWABLES

In the first half of the year, the green energy supply to the United Energy System of Ukraine has increased by 18.9%, or 53.9 million kWh, compared to the same period of the previous year,
and reached 337.8 million kWh.

Main factors that have affected the performance indicators:

• Increase of power production by Botievo Wind Farm by 16.6%, or 47.2 million kWh. The key growth factors are favourable weather conditions and well-planned operation and maintenance of the wind farm's equipment. The availability factors for the wind turbines and the plant infrastructure remain sustainably high: 98.50% and 99.19%, which are higher than average world indices.
• Tryfanivska solar power station has produced 6.6 million kWh. The availability factor of the SPP equipment amounted to 99.29%.

Key projects being implemented in the period:

• Primorsk wind farm: the first stage construction is progressing according to schedule. A contract has been concluded with GE for the supply of 26 wind turbine generators with an installed capacity of 3.8 MW each and high-voltage equipment for a central power distribution station of 150 kV and two substations of 150/35/10 kV, with the introduction for the first time of digital technology in the Ukraine. In addition, in the first half of the year, 24 sites for wind turbine foundations were prepared, 7 of which concrete foundations have been already completed. Works have been performed on road construction, installation of field cable power lines and transmission lines.
• Nikopol SPP: construction for the 200 MW (AC) capacity solar PV plant has begun. The supplier of solar panels for the station will be Seraphim Solar from the People Republic of China, and the supplier of the central type inverters will be Shenzhen KSTAR Science and Technology.
• Development of further wind and solar power projects with a total capacity of 340 MW is continuing.

DTEK Oil&Gas

According to the production plan of Naftogazvydobuvannya PJSC, 818.2 million cubic metres of natural gas and 25.2 thousand tonnes of gas condensate have been extracted over the reporting period. The indicators are lower compared to the same period of the previous year by 16.4 million cubic metres and 3.1 thousand tonnes, respectively, such decrease was caused by scheduled repairs, and it will be compensated in the second half of 2018.

Main factors that have affected the performance indicators:

• Overhaul repair of well No. 23 at Semyrenkivske field
• Implementation of measures aimed at intensifying production rates on the existing well stock.

Key projects being implemented in the period:

• Completion of drilling of well No. 25 at Semyrenkivske field with the depth of 5,625 metres with horizontal displacement of 700 metres
• Drilling of well No. 43 with the design depth of 6,200 metres at Semyrenkivske field
• Construction of a propane refrigeration unit at Olefirivka PGPT.

See also

16/07

DTEKDTEK Oil&Gas started drilling of a new deep well at the Semyrenkivske field

06/07

DTEKFitch Ratings published DTEK Renewables B.V. Long-term Rating

22/06

DTEKIt's Now Easier to Connect to Power Grids: DTEK Kyiv Grids Grant Open Access to Power Grid Maps

Reference

DTEK is a strategic holding company that develops business in the energy sector. DTEK's companies employ 73 thousand people. Maxim Timchenko is the Chief Executive Officer of DTEK.
DTEK companies produce coal and natural gas, generate electric power at the fossil-fuel fired power plants and renewable energy power plants, supply thermal and electric power to end consumers, and provide energy services. The operating companies directly manage production companies in each of the business streams.
DTEK's production indicators for 2017: the company has produced 27.7 mn tonnes of coal, 1.655 bcm of natural gas, generated (supplied) 37.1 bn kWh of electric power, of which 637.8 mn kWh have been provided by the renewable energy sources; and transmitted 43.2 bn kWh of electric power via the grid.
DTEK is a part of the financial and industrial group System Capital Management (SCM). The shareholder of the group is Rinat Akhmetov.
For more information, visit: https://dtek.com/en/
To learn about social partnership projects being implemented in the cities of DTEK activity, and to get a detailed report on the status of their implementation, please visit https://dtek.com/en/sustainable_development/

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