The activity of the Association of Gas Producers of Ukraine proves that there is nothing impossible for the Ukrainian oil and gas industry on the path of its development and international validation. This path was not easy, but already now the results of careful and hard work allow us to say that developing the state legislative opportunities and using the best world experience can lead the industry to a new level. The executive director of the Association Roman Opimakh told about this path during the VI Newfolk International Oil and Gas Conference.
Thanks to the active position of the Association under the leadership of Roman Opimakh and to all those who provided professional support for such necessary changes, now we can regularly receive news on the next steps in advancing the industry in the international arena and the tendency to increase its own gas production.
Summing up the results of the Association's three-year activity, Roman Opimakh noted that during this time 13 regulatory acts were adopted that are aimed at the developing of the industry. The fiscal system was improved, the incentive royalty for drilling new wells was introduced. This fiscal regime is the most attractive in Europe. Moreover, a moratorium exists on increasing this royalty rate for the period of five years. The second important initiative is the deregulation of the permitting system. More than 20 permits and approval procedures were canceled. For example, mining allotment, duplicate permits to remove the fertile soil layer, permission to construct a well and other bureaucratic procedures remained in the past.
Also, due to the royalty decentralization, local communities were able to receive revenues directly into their budgets since last year. The EITI mandatory international reporting was introduced in 51 countries of the world.
Also, the Association together with the Public Service of Geology and Subsoil of Ukraine launched a unique English-language platform where anyone can get acquainted with the characteristics of each site for auctions, PSA contests and PEC projects (service contracts with risk) for free.
The first transparent three rounds of oil and gas auctions already took place. 16 out of 26 proposed special permits were sold for record-breaking money for Ukraine. As a result, the state budget received more than UAH 322 million, which is almost twice as much as expected value of lots.
A lot of things in the bidding were implemented for the first time in Ukraine. It was the first time when the bidding took place online without prequalification. For the first time applicants had 90 days to prepare the application and study materials. For the first time geological information was open, which allowed the applicants to study the site for free. For the first time the winner undertook the specific commitments to implement the program, in particular, to interpret and conduct seismic survey, as well as to drill a productive well within 3-4 years.
Among the Association’s this year’s tasks, Roman Opimakh, in particular, highlights the importance of entering new players into the market of Ukraine. According to him, the involvement of foreign energy and service companies in exploration and production of hydrocarbons and the application of leading international practices and technologies will allow Ukraine to increase its gas production and achieve energy independence in the very near future.
The promotion of prospects for the Ukrainian oil service market on the international arena is also an important task. Recently, 23 applications from 14 companies were submitted for participation in 9 tenders for entering into onshore PSAs. One of the companies is the Canadian Vermillion Energy with a turnover of more than USD 4 billion, which operates in 10 countries of the world. In 2019, the company expects to drill 160 wells. The company applied jointly with Ukrgazvydobuvannya JSC.
The second noteworthy company – EPH - is well known in central Europe, which together with the Slovakian company Nafta qualifies for one of the sites, and also the American producer Aspect Energy. "This is a good trend. We will ensure fairly and transparent competition," Roman Opimakh remarked.
Considering the prospects for the development of the service market, Roman Opimakh announced the inclusion of Ukraine in world-wide statistics by Baker Hughes - Rig Count International, which will show how many drilling machines operate in Ukraine. Already a week after the announcement, this important for Ukraine event took place. In future issues, we will talk more in detail with Roman about the peculiarities of this rating and its importance for the Ukrainian service market.
As of May, 83 drilling rigs were involved in Ukraine (according to Baker Hughes - Rig Count International). This shows the potential of this market and interest from the foreign investors.
Roman Opimakh also notes that according to researches of the Association in Ukraine there are 16 drilling companies dealing with more than 180 operating machines.
On his words, the existing Ukrainian market of drilling rigs is the largest in Europe: "The becoming of Ukraine on this map confirms it as the country actually doubled the number of drilling rigs in Europe".
Summing up, Roman Opimakh noted that the service market of Ukraine experiences a shortage of drilling machines and other modern technologies that will only expand, taking into account interest in oil and gas fields: "The faster the service segment will develop - the faster gas production will evolve," Roman stressed.