Roman Opimakh. Executive Director of the Association of Gas Producers of Ukraine

The year of 2018 was marked by reforms in domestic gas production. Branch laws and government acts laid a reliable foundation for increasing gas production, raising investment and achieving Ukraine's energy independence.

We can confidently state that 90% of the tasks of the Government Action Plan on the implementation of the Concept for the Development of Ukraine's Gas Extractive Industry by 2020 were successfully implemented and key legislation is fully prepared. The introduction of incentive taxation for drilling new gas wells allowed laying more than 160 new wells in 2018, which is 30% more than a year earlier.

Due to the royalty decentralization, the oil and gas industry paid over UAH 2 billion to the good of local communities in those regions where production is being carried out. This is a good incentive for constructive dialogue and active cooperation between the industry and the local authorities.

Deregulation of gas production dramatically simplified the permitting procedures by revoking 15 concurrent encumbrances, facilitated land access and approached the Ukrainian system of regulation of the industry to the best international practices.

Moreover, the EITI international reporting standards became mandatory for inventors. It should increase the transparency of the industry, disciplining its players and unveiling myths around the industry.

But the most important achievement of last year was the improvement of the rules for subsoil access. These revolutionary changes will allow raising foreign investment and newest technologies, without which the development of the industry and thus an increase in the volumes of Ukrainian gas production will be impossible.

FIRST. The last bypass auction mechanism for making new oil and gas fields for use. From 2019, all new areas will be available exclusively through transparent and competitive bidding.

SECOND. Access was open to geological information and its circulation was liberalized. These progressive changes will encourage the digitization of government databases and the creation of the electronic data-room, as is the case in leading countries worldwide.

THIRD. And what is most importantly. Oil and gas auctions that will be launched online on the ProZorro.Sales platform and international contests for entering into production sharing agreements started.

The first oil and gas round, which subject were 10 sites with a total area of 1.81 thousand square kilometers, was announced on December 6, the definition of winners will be in March 2019. All sites are within well-explored oil and gas basins with extensive gas transportation infrastructure and seismic surveys performed.

Each site provides for minimum requirements for a search program of works - interpretation of seismic survey, new seismic researches and drilling of wells. This should advantage more efficient subsoil development and prevent "sleeping" licenses.

At the same time, at the government meeting in mid-December, the tender conditions were approved for 12 projects for entering into production sharing agreements. Each area provides for minimum requirements concerning the amount of investment and work program. After the tender documentation to be published, the applicants will have 90 days to review, make a decision and register the bid.

As we see, Ukraine is ready to involve foreign investors and modern technologies in domestic gas production. State’s proposal in 2019 will cover more than 40 oil and gas sites with a total area of more than 20 thousand km2.

Potential domestic and foreign investors can find more information on the open English-language portal www.GOukraineNOW.com - which is also an unprecedented testimony from the state to meet investors’ needs.

In addition, the state-owned company Ukrgazvydobuvannya started a transparent process to search for foreign partners to develop its depleted fields using international legal tools – production enhancement contracts (PEC). The results of competitions to determine the external operators of 14 fields will become known in March 2019.

At the same time, Ukrgazvydobuvannya entered into a number of service agreements with leading foreign contractors Schlumberger, Halliburton and BakerHughes to provide integrated services for the development of existing and new fields. The arrival and expansion of the activities of such global brands in the Ukrainian market is a powerful signal for the entire world professional community.

International capital is ready to invest. And we already see a serious interest from experienced energy companies, in particular from North America and Central and Eastern Europe. However, world competition, especially investment in exploration and production of hydrocarbons, is too tough. Except for Ukraine, oil and gas auctions in 2019 will be held in at least 13 countries – among them Argentina, Israel, Mexico, the USA, Croatia.

That is why Ukraine’s agenda for 2019 should include three key directions for the oil and gas industry.

Firstly, active popularization abroad and transparent auctions and contests for involving experienced domestic and foreign players.

Secondly, the creation of favorable conditions and the modernization of legislation for the development of unconventional hydrocarbons. After all, according to geologists, a large part of gas reserves and resources are hard-to-recover and concentrated in tight collectors.

Thirdly, together with the European Commission, the process of preparing a long-awaited update of the Subsoil Code. These amendments should modernize its provisions by simplifying and codifying the relevant legislation.

The world should know that our country is a reliable partner for investors. The partner who is thinking in a progressive way and is ready to learn quickly, implementing the best practices from around the world.