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release on April 21.
Naftogaz​ Group has attracted an international company, Expert Petroleum, to increase hydrocarbon production on fields of JSC Ukrgasvydobuvannya in Western Ukraine following an open tender.
“Within the first ever full-scale Production Enhancement Contract (PEC) in the history of Ukraine's oil and gas industry, the Western partner has committed to about UAH1bn ($30mn) into intensification, drilling and development of infrastructure in the first five years of cooperation and, potentially, make additional investments after that,” the company said in a statement emailed to Newsbase.
Partnership between Naftogaz and Expert Petroleum will generate at least an additional 300mn cubic meters of gas within five years from 13 small fields in Western Ukraine.
Ukraine has been struggling to increase its production of gas to break its dependence on imported Russian gas. Currently Ukraine produces some 20bcm of gas from its domestic resources, about half of what it consumes each year. Over the last three years it has refused Russian gas imports and sourced gas from its EU partners in the west, but pays a steep premium to market prices as a result.
The country has two large gas basins in the east and west as well as significant shale deposits, but has been unable to attract much in the way of international investment to develop them due to a series of economic and political crises in the last decade.
“International partnerships developing is one of the key vectors of Naftogaz' transformation program. The agreement assumes the largest foreign investment in Ukraine’s gas production over the last five years,” Naftogaz said. “This money will be directed into development of those small-size depleted fields for which Naftogaz does not have enough own resources under the circumstance of significant drop in prices for energy resources. Instead of the expected production decline on these fields, we will achieve an increase in production.”
The deal is designed to bring new technologies and European standards for management of "old" and "small" deposits, which can be extrapolated to other fields, the company said.
“After all, most of Ukraine's oil and gas assets are depleted and small in size. This is an important event for stabilizing the situation not only in the industry but also in the Ukrainian economy. And this is an example of innovative anti-crisis solutions that the country needs today,” Naftogaz Group's Chief Transformation Officer Otto Waterlander said in the statement.
The investment will lead to an intensification of work, an increase in tax and other budgetary contributions that will increase Ukraine’s GDP by more than UAH4bn with the biggest effects on the local economy of Lviv in western Ukraine where the work will be concentrated, according to the company’s calculations.
“We have a solid and successful track record of implementing such Production
8​ UKRAINE Country Report​ May 2020 ​ ​www.intellinews.com