Page 15 - FSUOGM Week 28 2020
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FSUOGM POLICY FSUOGM
Ukraine to rehold auction for oil and gas sites
UKRAINE
The contest will now be held on August 6.
UKRAINE is restaging an auction for rights to eight oil and gas sites, a er a contest scheduled this month failed to attract enough interest, amid bearish market conditions.
Ukraine’s state geological department announced last week that the auction would be held on August 6. e starting prices for bids for the projects have also been halved.
On offer are the South-Monastyretskoye oil eld, the Priazovskoye gas eld and the Pech- enezhsko-Kochetkovskaya, Knyazhinskaya, Lyubizhnyansko-Merishorskaya, South-Sliv- kinskaya, Vostochno-Kosmatskaya and Lyu- chivsko-Berezivskaya blocks. The acreage is spread across the Ivano-Frankivsk, Kharkiv, Lviv and Zaporizhzhia regions.
The department is offering the Knyazhin- skaya at the highest starting price of UAH108.8mn ($4mn). Combined, the initial prices come to UAH165.5mn.
The areas do not contain any confirmed, commercial resources, and will therefore require signi cant investment by subsoil users. ose that are awarded concessions will need to collect 3D seismic data and drill at least one exploration well during a three-year period.
Ukraine has offered dozens of
production-sharing contracts (PSCs) and con- cessions over the past two years, as it looks to encourage investment in gas exploration and become self-su cient in gas supply. e auc- tions so far have had mixed success, however.
e rst of their kind since Ukraine’s 2014 revolution and subsequent economic collapse, the contests have been praised for their transpar- ency. But the response from investors has been tepid. A total of 43 blocks were awarded in 2019, but only 28 attracted o ers. Some 19 blocks were awarded under 20-year concessions, while a fur- ther nine were awarded under PSCs.
Disappointing expectations, the majority of the blocks have been won by state-owned Ukr- GasVydobuvannya (UGV) and other domestic companies, rather than international investors. ose foreign rms that have entered Ukraine include Canada’s Vermilion Energy and Aspect Energy of the US.
e state geological department had wanted to o er rights to a large o shore area known as Dolphin earlier this year, but this plan was put on hold because of the market collapse. Gas prices in Europe are at an all-time low, as the pandemic has exacerbated a global supply glut and demand remainssluggish.
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