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    Ukraine Needs Govt Action to Realise Gas Potential: Naftogaz


The government needs to sign awarded PSAs, allow offshore access, continue and expand incentives and simplify licensing procedures, Naftogaz has said.

by: Joe Murphy

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Ukraine Needs Govt Action to Realise Gas Potential: Naftogaz

Naftogaz has called on the Ukrainian government to take key decisions to spur development of the country's gas resources, adding that the state needs a "proactive attitude" in order to achieve energy independence.

The company presented its upstream developments plans in a meeting with Ukrainian prime minister Denys Shmyhal and other ministry heads, it said in a statement on September 9.

Naftogaz urged the government to sign production-sharing agreements (PSAs) that were awarded through tenders more than a year ago and introduce an incentive royalty for tight gas. It also called for producers to receive access to the Black Sea shelf as well as large promising onshore fields. Incentive royalties for conventional gas must continue and licensing procedures should be simplified, it said.

"Ukraine has opportunities to move from stagnation towards increases in production. However, new areas and projects that can deliver this result pose significant risks and require substantial investments, new technology, and expertise," CEO Andriy Kobolyev said.  

Naftogaz is ready to take responsibility for these projects, he said, "but successful implementation requires a proactive attitude from the state."

Shmyhal stressed the importance of domestic gas production to Ukraine's energy independence, noting that the government "exerts every possible effort" to see development plans realised.

Ukraine has offered up dozens of licences and PSAs over the past two years in an effort to kick-start a revival in exploration. But interest from investors was lukewarm, and hopes of securing significant foreign investment were disappointed.

Authorities held a contest last year for rights to some 9,500 km2 of offshore acreage, but an award to London-based Trident Resources was cancelled after the government concluded that bidders had not been given enough time to size up the project. Preparations to re-stage the tender have dragged on, in part because of coronavirus-related disruptions and weak gas market conditions.