Production Sharing Agreements Ukraine

The Ukrainian authorities have recently done much to change the regulatory and investment environment in the field of gas production: for the period from 1 January 2018 to 1 January 2023, a specific stabilisation clause to fix incentive rents has been developed, the tax regime has been improved and the authorisation system has been simplified. “Ukraine has the potential to move from stagnation to production growth,” Kobolev said at a meeting with government officials in Kiev. Although an PPE can be completed for the exploration and production of mineral resources, it is primarily suitable for hydrocarbon exploration and production. Mr Naftogaz said he was ready to implement pilot projects in new production sectors to reduce the risk of such developments for the sector as a whole. To speed up the process, officials came up with the idea of designing a PsA model. According to USAID, the main advantages of the PSA (i) model are the availability of the negotiating base between Ukraine and investors; (ii) more transparency; and (iii) protect Ukraine`s interests through the pre-agreed provisions. The great advantage is that investors can have legitimate expectations. On the other hand, the PSA model does not comply with the current EPI law, while each tender area is quite unique and requires the application of different rules in the PSA for exploration and production. Another possibility for discussion is not to use the PSA model, but to define the mandatory structure and the terms of the EPI. The proposed distribution of production, which is attractive to the state, the large areas were opened to further exploration last year, but the signing of new production-sharing agreements has been delayed and gas producers believe that there is a need for more incentive for industry to stimulate upstream activity. The PSA Act was passed by Parliament in 1999, but it has hardly been used by the state and investors. To date, only four PSAs have been completed for natural gas projects in Ukraine and hydrocarbon production in the underground has never begun.

Vanco, Exxon Mobile and Eni lost projects due to the annexation of Crimea, Shell withdrew from a project due to the military conflict in eastern Ukraine, while Chevron withdrew for other reasons. Ukraine has outlined three other blocks that will be proposed as part of oil and gas sharing bids as part of the country`s ongoing series of licensing cycles to reduce its dependence on natural gas imports. experience in hydrocarbon exploration and production, particularly from unconventional sources September 11, 2019, the Government adopted a resolution abolishing the tender for the dolphin bloc, in which it called it incoherent with the best practices of the European Union and the European Parliament and Council Directive 94/22/EC on the conditions for granting and using hydrocarbon exploration, exploration and production permits. In recent years, Ukraine has made considerable progress in implementing its ambitious economic reform agenda.

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