June 2018 – Kinstellar Energy Digest: Ukraine. May 2018 in Review
Fields for mineral resource exploitation and production
Ukraine’s State Service on Geology and Mineral Resources (“Derzhgeonadra”) has announced on its website plans to auction the rights to 40 new oil and gas fields.
Specifically, the announcement relates to: (i) 22 promising offshore areas located on the shelf of the Black Sea or Azov Sea; (ii) the Chernytska Oil and Gas Field and the Lipovetska Field located in western Ukraine; and (iii) nine oil and gas fields in the Dnipropetrovsk, Kharkiv, Sumy and Poltava regions.
Although the Derzhgeonadra has sent a straightforward signal to potential investors, it is still unclear when the new fields would actually be auctioned.
Pending discussions on elimination of the “approbation” procedure
In addition to anticipated auctions for oil and gas fields, May of 2018 saw an increase in discussions about the abolition of the approbation procedure of geological information. Among market players, the approbation procedure is criticised as an unclear and uncompetitive way of obtaining special permits by sidestepping auctions.
In May, the head of the Derzhgeonadra announced the preparation of amendments to the regulatory framework for the withdrawal of the approbation procedure, which, according to him, “offsets the auctioning activities for the sale of hydrocarbons.”
TRANSPARENCY: EITI Report for 2016 is now available
The Extractive Industries Transparency Initiative presented the third National Report of Ukraine for 2016 (“Report”).
According to the Report, as of 01 January 2017, Ukraine`s balance sheet for oil reserve deposits are estimated at 121,124 thousand tonnes; the balance sheet for natural gas reserves are estimated at 905,623 million cubic meters; and its off-balance reserves for natural gas are estimated at 9,553 million cubic meters.
REGULATOR: Appointment of new members will secure a quorum
On 29 May 2018, the President of Ukraine appointed five new members of the National Commission for the regulation of energy and utilities (the “Regulator”). A few days earlier, the President dismissed the Head of the Regulator due to a planned rotation.
The appointment of the new members of the Regulator was preceded by an open tender held by the special commission for selecting ten candidates, which was submitted to the president for appointment.
In accordance with law, the Regulator can adopt a decision if at least four members of the Regulator vote “yes”. From late March 2018, only two positions at the Regulator were filled, which led to the impossibility of making decisions.
For further information please contact: Olena Kuchynska, Partner, at , Viktoriia Pysmenna, Associate, at , or Mariana Antonovych, Associate, at .