The Executive director of the Association Artem Petrenko in an interview with 112.ua summarized the results of the gas production industry during the past year:
"For the second year in a row, we oversee a positive upward trend in gas production by independent companies: in 2019 production growth was 5.05% and reached a record 4.6 bcm of gas. Some companies have increased their gas production by 50% and more"
Artem noted, that the growth of production by independent companies was mainly due to drilling of new wells. Activation of this process was inspired by the injection of incentive rent since January 1, 2018. After two years of implementation of this norm, over 200 wells were drilled by gas producers, a third of which was drilled by private companies. For comparison, in 2017, independent companies drilled only 22 wells.
"A stable fiscal policy in the sector and maintaining incentive taxation is very important to maintain the positive trend of production growth", said Artem Petrenko.
In addition, cooperation between national and private companies for the development of canned wells, as well as effective work with the existing fund, which included workovers and method of intensification and hydraulic fracturing have been facilitating the growth of production.
"We are optimistic about this year. We expect independent gas producers to continue growing by 5%. UGV announces, that commodity gas volumes will be saved at the level of the last year".
Artem Petrenko also narrated on the O&G auctions and tenders, which Ukraine conducted in 2019.
"Unprecedented number of blocks with a total area of 29 000 sq.km were offered for the O&G licensing rounds. As a result, Ukraine conducted 5 rounds and sold 19 blocks: Ukrgasvydobuvannya purchased 14 licenses, one of the blocks was purchased by the foreign investor – Slovakian Nafta, other blocks were received by domestic independent companies. Since the fields were sold last year, companies will be able to begin work on them only after EIA procedure, which usually takes at least 6-8 months. Until this conclusion, gas producers are in fact not allowed to undertake any work on the fields".
Besides oil and gas auctions, 13 blocks were offered for PSA tenders. Procedures for confirming texts of agreements between investors and Interagency Commission are ongoing in 9 tenders. According to the legislation, agreements must be concluded within a year after the announcement of the winners of tenders. Also, applicants for the development of 3 oil and gas blocks under the terms of production sharing agreements were announced on February 4, 2020.
"The State Geological Service states, that oil and gas blocks with a total area of over 15 000 sq.km are planned to be offered in 2020. By the way, foreign companies will be able to participate directly in e-auctions without previous registration of a company in Ukraine. The corresponding decision was adopted by the Government in the end of the last year. In addition to the holding oil and gas auctions and tenders, stable fiscal policy, transparent rules of the game and modernization of the relevant legislation according to international standards are important for attracting investors to the sector", said Artem Petrenko.