On February 15, the CIS-FSU Chapter Event – "Ukraine 2019 Licensing Rounds: A Big Attraction for Oil & Gas Investors" – took place in Kyiv. It covered two major events that are to take place in the Ukrainian oil and gas industry, being 12 production sharing agreement (PSA) tenders in June 2019 and 17 online license auctions.
The event was organized by the Association of International Petroleum Negotiators and the Association of Gas Producers of Ukraine, and sponsored by Redcliffe Partners and EY.
PSA tenders offer a good opportunity for upstream investors to obtain a 50-year PSA that will enjoy all key industry-standard provisions and benefits: legislative stability, tax freeze, international arbitration for foreign investor PSAs, and other special regulatory and tax regime.
Unlike PSA tenders (where several criteria will be evaluated to determine the winner), online auctions for oil and gas licenses will be held online and qualified participants will have an opportunity to bid; the highest bidder will win the auction.
The event was conducted as a live discussion, divided into two parts. The expert panel included Oleg Kyrylyuk, Acting Head of the State Geology Service of Ukraine, Roman Opimakh, Executive Director of the Association of Gas Producers of Ukraine, and Charles Valceschini, Founder of Valceschini & Associates, TechNefteGaz Consulting.
The first part of the discussion concentrated on Production Sharing Agreements; Dmytro Fedoruk, partner and head of the Energy practice of Redcliffe Partners, acted as a moderator. In this session, panelists discussed what made Ukrainian PSAs attractive for investors, how companies can prepare their tender bids in the best possible way, how these bids will be evaluated, and what to expect from the PSA negotiation process.
The second part of the discussion focused on online licensing auctions, and was moderated by Albert Sych, Partner, and Law leader for Ukraine at EY. The participants discussed the process of companies’ participating in online auctions and the probable bidding rules. In addition, recent regulatory changes – key reforms that were recently implemented in Ukraine’s E&P market, and measures to unlock the promising potential of natural gas production – were also deliberated.