The Prime Minister of Ukraine, Volodymyr Groysman, has ordered the Ministry of Finance of Ukraine to explore implementation of the stimulating royalty rate on new gas wells starting as soon as 2018. The Minister of Finance of Ukraine, Oleksandr Danyliuk, has informed about it during today's hour of questions to the Government at the Verkhovna Rada of Ukraine.
«The Prime Minister has given the order, and we are exploring the mechanism of stimulating production from new wells. When the amendments to the budget will be discussed during the second hearing, we will have a position to integrate», – O. Danyliuk stated.
The Association of Gas Producers of Ukraine is noting that currently, to increase domestic production, the Government's Concept for Development of Ukraine's Gas Production Industry by 2020, there is a tool outlined, which will economiclly stimulate the companies to invest in drilling – it is a 12% royalty on new wells. Such an approach will allow to maintain stable budget revenues in 2018 and significantly increase them in the years to follow.
Roman Opimakh, the executive director of the Association: «The gas production industry needs more investments and modern technologies, and for over a year has been awaiting for the Government to undertake decisive steps to increase the investment attractiveness of the industry, which has a great unrealized potential. Implementation of the stimulating taxation on new investments is the decision in favor of the country and its energy security. The development of the production industry will enhance the energy security of Ukraine's economy, will stimulate creation of new workplaces along the whole supply chain, and finally may result in surplus of domestically produced gas, which will decrease the gas prices via market mechanisms».