In 2018 Ukraine has produced 21 billion cubic meters of natural gas, which is a 2.5-percent increase compared to the previous year. The growth rate remains moderate but stable for a third year in succession.
Both state and private sectors have improved production results together building up a solid foundation as they have drilled new wells by more than a third compared to last year – resulting in an expected record increase of production in 2019.
The last two years are what have delivered this significant improvement of the regulatory climate and upstream legislation. This success is the common merit of the Ukrainian government and parliament, which proclaimed the development of domestic natural gas production as a strategic task of the state.
Top-Five events of 2018
1. The launch of oil and gas licensing rounds
Ukraine’s government has opened transparent online auctions and international production sharing agreements (PSA) tenders, while state-owned Ukrgasvydobuvannya has put their legacy acreages up for production enhancement contracts (PECs).
2. Industry deregulation
Over 15 various permits and legal procedures have been abolished providing access to land tracts for the exploration and production of hydrocarbons.
3. Geodata disclosure
Access to Ukraine’s state databases has been simplified and can now be arranged into a single directory.
4. Gas transmission tariffs
Ukraine’s national energy regulator has introduced a competitive entry fee to gas pipelines for upstream companies taking into account common European Union practices.
5. The introduction of a single license fee
A fee for license renewal, another fee for an increase of reserves, and the required revaluation of licenses without compelling reasons – all of this has been cancelled in line with the European energy legislation.
2019 promises to be another breakthrough year for Ukraine’s natural gas production industry, bringing even more positive news for Ukraine’s energy independence.
Top 5 targets for 2019
1. The arrival of new players
Foreign energy and service companies are highly welcomed to the Ukrainian extraction and production market.
2. Ukraine in the rig count
Ukraine deserves to be marked on the globally known Baker Hughes map of international rig count.
3. Further deregulation
Over 10 acts of upstream legislation need to be advanced in particular with the purpose of promoting the commercial development of unconventional hydrocarbons.
4. Data rooms
Ukraine must liberalize its geological information through digitalization and online access.
5. Efficient regulation
Ukraine must increase efficiency and transparency of upstream regulation by strengthening the competences of the State Geological Service as a “one stop shop” office.