Ukraine upstream summary Report

Country Report 19 August 2021

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Report summary

Ukraine is a mature producer, but remains the largest gas and second-largest liquids supplier in Central and Eastern Europe. It has also historically been one of Europe's largest gas consumers. Ukraine’s oil and gas output peaked in the 1970s, during the Soviet era. Since the mid-2000s, sales gas production has remained stable at 1,500-2,000 mmcfd. Greater gas self-sufficiency by 2030 is a key political and economic objective. State-owned Naftogaz dominates the upstream sector and has highly ambitious investment and resource replacement goals. By 2030, Naftogaz expects the vast majority of its gas output to come from greenfields: new discoveries, including offshore in the Black Sea, and derisked unconventional activity.

Executive summary
Key facts
Location maps
Key companies
- State-backed companies
  - Naftogaz (and Ukrgazvydobuvannya (UGV) subsidiary)
  - Ukrnafta
  - Other state-backed operators
- Other key investors
  - Local operators
  - IOCs
Geology
- Introduction
- Dnieper-Donets basin
  - Location and structure
  - Reservoir and hydrocarbon quality
- Carpathian province
  - Location and structure
  - Reservoir and hydrocarbon quality
- Azov-Kuban province
  - Location and structure
  - Reservoir and hydrocarbon quality
Exploration
- Licensing
- Overview
  - Standard licence durations
- Onshore - key recent licensing
  - Concessions (awarded via auction)
  - PSCs (awarded via tender)
  - Production Enhancement Contracts (PECs, via direct talks)
- Offshore - key recent licensing
  - Direct concession awards to Naftogaz (2020 onwards)
  - Cancelled PSC tender (2019)
- Historical activity (pre-2018)
  - Licensing approach
  - Onshore - IOC licensing
  - Offshore - IOC licensing
- Drilling
  - Drilling activity
- Overview
- Current and future E&A priorities
  - Onshore
  - Offshore (Black Sea)
- Historical activity
  - Onshore
  - Offshore
Reserves and resources
- Reserves
  - Overview
  - Reserves by basin
  - Reserves by shore status
  - Reserves by report
- Contingent resources
  - Contingent resources by basin
  - Contingent resources by shore status
Production
- Overview
  - Crimea production (onshore and offshore)
- Liquids
  - Overview
  - Historical production
  - Current and future production
- Gas
  - Overview
  - Historical production
  - Current and future production
  - Supply-demand balance
Infrastructure
- Introduction
  - Transit role
  - National transmission system operators
  - Current investment priorities
  - Pipeline tariffs
- Oil infrastructure
  - Druzhba pipeline network
  - Transdnieper pipeline network
  - Odessa-Brody pipeline
- Rail and sea transportation
  - Rail infrastructure
  - Ports and shipping
- Refineries
- Gas infrastructure
  - Overview
  - Central Corridor
  - West Ukraine
  - Eastern Ukraine
  - Crimea
- Gas processing plants (GPPs)
  - UGV-operated facilities
  - Ukrnafta-operated facilities
- Underground gas storage (UGS)
  - West Ukraine
  - Central Ukraine
  - East Ukraine
  - Crimea
Policy and regulation
- Key legislation
- Tax Code
- Subsoil Code
- Law on Concessions
- Law on Production Sharing Agreements (PSA Law)
- Law on Oil and Gas
- Law on amendments to certain legislative acts of Ukraine on deregulation in the oil and gas sector
- Midstream legislation
  - Law on Pipeline Transport
  - Law on the Natural Gas Market
  - Law on amendments to certain legislative acts of Ukraine in connection with the separation of natural gas transmission activities
- Other legislation
  - Law on Environmental Protection
  - Law on Natural Monopolies
- Regulatory body
  - Ministry of Energy
  - Ukrainian Geological Survey (State Geologic and Subsoil Survey)
  - Ministry of Economy
  - Ministry of Environmental Protection and Natural Resources
- State oil company
- International boundaries
- Black Sea and Sea of Azov (Russia)
  - Status of Crimea
  - Other preceding disputes
- Black Sea (Romania)
  - Background
  - Resolution
Fiscal terms
- Overview
- Current fiscal terms
- Concession
  - Key legislation
  - Government equity participation
  - Bonuses, rentals and fees
  - Subsoil use tax (SUT)
  - Corporate income tax (CIT)
  - Fiscal treatment of decommissioning
  - Product pricing
  - Indirect taxes
  - Sample cash flow
- PSCs
  - Key legislation
  - Ring-fencing
  - Tax stability
  - Government equity participation
  - Bonuses, rentals and fees
  - SUT / royalty
  - PSC cost recovery
  - PSC profit sharing
  - Corporate income tax (CIT)
  - Indirect taxes
- Production Enhancement Contracts (PECs)
  - Overview
  - Key terms
- Historical background
- Concession
  - Royalty (abolished from 2013)
  - Payment for subsoil use (pre-2013)
  - Payment for geological surveys (abolished from 2011)