Аrtem Petrenko, Executive director:
This year was truly tough and unexpected for the gas production industry not only in Ukraine, but, indeed, for the rest of the world. COVID-19 pandemic, economic crisis and record drop in prices for hydrocarbons have caused leading international companies to bear billions of dollars of losses, canceled previously planned investments and freeze new promising projects, which have dramatically reflected on production volumes.
Domestic gas production has experienced a similar situation. Each market participant was forced to cut various investment projects and take a look on the new ones with a considerable caution. Unfortunately, we faced the unpleasant fact of a slight decrease in domestic gas production by the end of the year. However, it should be mentioned here that due to the investments of previous years, private producers have been increasing their gas production outputs for several years running.
Against the odds, the highlight of 2020 was signing of seven production sharing agreements with domestic flagship companies (Exploration and Production division of the Naftogaz Group, DTEK Oil&Gas, Geo Alliance Group and Zakhidnadraservis) at the end of the year and one more with American Aspect Energy at the beginning of 2021. Overall, Ukrainian and foreign investors are going to develop large-scale oil and gas blocks with total area of 11 000 sq.km, and will invest into them at least UAH 11 bln in the next 5 years.
Under the rough conditions in domestic and global gas production, I should mention the compromise decision of the Government to transfer the right to develop offshore of the Black Sea and Yuzivska block to the largest state company – Naftogaz Group. International investors who has relevant experience and appropriate technologies can join such ambitious and capital-intensive projects in the future.
Daniel Maydanik, Honorary President:
2021 is a year of extensive, high technological and capital-intensive gas exploration projects both onshore and at the Black Sea shelf. The beginning of the development of new oil and gas blocks is a new chapter in the history of domestic gas production, that undoubtedly will ensure industrial growth, engagement of new technologies and will become a prerequisite for enlargement of gas production in Ukraine.
Among the main priorities in the following decades are deep drilling and development of hard-to-find hydrocarbon deposits. These projects currently are wallflowers in Ukraine, but commonly used in leading gas producing countries all around the world. Drilling of wells deeper than 10 000 meters and more is no longer a dream, but a reality. Obviously, it’s much more expensive, but onion is worth peeling and upcoming debits offset the costs.
Now Ukraine takes the first steps in breaking new grounds and depths in gas production. Whole success will depend on producers’ proficiency and relevant experience to explore new fields, evaluate and interpret geological data, integrate international practices into development of ubsoils and intensify the production. And Government should equally contribute to the process by providing investors of the sector with stimulating taxation, equal rules of game, stability and foreseeability, giving the possibility to plan production activities for several years ahead.
I shall mention a few numbers. During the three years, Ukraine received 4.5 bcm from new drilled wells which amounts 273 pcs. This was made possible, first of all because of introduction of stimulating taxation for drilling of new gas wells. Clearly, that by granting stimulations, Government literally motivates investors to work more actively. Hence, it won’t have a great time for upcoming positive results.