The role of private companies in achieving energy security and independence of Ukraine was the topic of today's round table at SigmaBleyzer Investment Company.
It's been organized by the Office of the National Investment Council of Ukraine, the Association of Gas Producers of Ukraine, and the U.S.-Ukraine Business Council (USUBC).
Yuliya Kovaliv, (Head of the Office of the National Investment Council of Ukraine): "The four key requirements raised by the potential investors are: 1) access to geological information; 2) simplification of the fiscal regime; 3) deregulation (simplification of land allotment for wells development); 4) regular and trasparent auctions. Without changes in these 4 key areas, our plans to atract investments to the industry are at risk of remaining solely on paper."
Roman Opimakh, (the Association of Gas Producers of Ukraine): "The world has various examples of upstream policies: from the development of national monopolies to full dominance of the private companies. In the United States, it is the small private companies, not the supermajors, who became the driving force of the steep growth of hydrocarbons production.
In the past 10 years, the share of the private companies has increased 15 fold in Ukraine and is 22% currently. 10 companies provide for 98% of the private natural gas production in Ukraine. In 2017, the state-owned Ukrgasvydobuvannya is showing positive dynamics of production. The main reserves are accumulated in this company. However, the future potential is in the resource base of proven reserves in small deep fields. The potential investors highlight two criteria: conditions of access to subsoil and expected revenues. The two criteria itersect with the US Sactions Act of 2017."
Oleksandr Dombrovsky, "Today we need to give an answer to the question: will increasing production and energy security will be performed by the private sector, or the state-owned? Are we facilitating the state monopoly or creating a real competitive market that we need today? If we as the country will keep the State Geologic Service's information closed, there is no movement forward to be talked about. We should put up the average sized licenses for a transparent auction and let the investors enter. Let's make this market "explode" to produce more! 80% of the issues that we are discussing today are in the competence of the Government. We have agreed during the committee hearing to let the State Geologic Service to report on what they propose to increase production, and give the private and state investors the freedom to work in Ukraine".
Olga Bielkova, (Ukrainian MP, Deputy Head of the Committee of the Verkhovna Rada of Ukraine on Energy, Nuclear Policy and Security): "In Ukraine, gas production issues will be resolved when the companies will stop being opposed to, and will cooperate under transparent conditions, not like it was under JAAs, but transparent agreements instead. I believe in the progress of the private companies, since Ukraine does not have the resources to invest in production. They will guarantee quality changes not only regarding reforms on the market, but the gas price as well.
We, here at the Committee will insist on further development of the already registered initiatives of the industry. We will "finish them".
Regarding the US sanctions. It is the first time that the lawmaker in the US has combined the negative and positive sanctions in a single document. I stress out the importance of establishment of the specific responsible authorities of cooperation with the American partners in the part of section 257 of the Sanctions Bill, which includes the intentions of the American Government to prepare the Plan to Promote Energy Security in Ukraine. Our foreign partners are saying today that: we cannot influence Russia, while Ukraine cannot ensure increase of production, and transparency of natural gas production. You either ensure all of the above, or the conversation is over. This is a unique chance for us to shift the relations with the USA to a very high and constructive level, of which the Ukrainian consumers will benefit".